What Is Critical Illness Insurance In Canada

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What is critical illness insurance in Canada
Article Overview

Critical illness can be difficult, but recovery doesn’t have to be. When a critical illness strikes, it’s important to focus on getting well and worry less about medical bills. 

We have to admit that everyone wants to be healthy, but sometimes illness is inevitable. Fortunately, Canadian are now gradually paying more attention to healthy life, and medicine is increasingly developed. Even if you are unfortunately infected, the chance of recovery and recovery process has been greatly improved. However, rehabilitative care is very expensive, and treating and combating of the illness often requires a lot of money. That’s where Critical illness insurance comes to play by giving the insureds and their families the extra coverage they need to recover from a health problem so they can rebuild their body, mind and budget.

In this article, we will be explaining everything you need to know about critical illness insurance in Canada and why you may need one.

What is critical illness insurance?

Critical illness insurance means that once the insured is diagnosed with any disease covered by the policy, the insured can receive the amount specified in the policy without any expense receipt, and the insured is free to use the indemnity for any purpose. Therefore, the compensation method of critical illness insurance is not actually reimbursed like travel medical insurance, extended medical insurance, etc.; nor is it issued on a monthly basis like disability insurance and long- term care insurance. Instead, once the insured is diagnosed with any one of the diseases covered by the insurance, and the relevant requirements specified in the policy are met, the entire insured amount will be paid in one lump sum. Insurance benefits are tax-free. After the claim is paid, you get to keep the money even if the serious illness recovers.

How does critical illness insurance work?

The concept behind critical illness insurance is that whenever you’re confronted with a life-threatening health issue or any medical emergency, you might not be able to finance treatment and rehabilitation even with available government free health card. In fact, you may also be unable to work and support yourself. A lump-sum benefit payment might provide you with the financial assistance you need to recover. 

You may get critical illness insurance in a variety of ways:

  • Directly from your employer, if there is a provision for that within the company.
  • Directly from a certified insurance company within Canada.
  • As an add-on offer to a life insurance plan.

A critical illness insurance policy, unlike typical health insurance, provides cash for expenditures like out-of-pocket medical fees, rent or mortgage obligations, as well as childcare support. If apply and qualify, you will start paying a monthly fee and receive a maximum lifetime benefit — usually a one-time payout.

Why do you need critical illness insurance in Canada?

Many people have such questions. As a Canadian resident, why should you buy critical illness insurance if you can enjoy the free medical care provided by the Canadian government? You must know that in Canada, if you are unfortunately seriously ill, the medical service plan only covers the doctor’s consultation fee and medical expenses during hospitalization, but not drugs and nursing services when you are out of the hospital; more importantly, free medical care cannot solve the problem of illness due to illness. And the loss of economic income, it is especially necessary to purchase critical illness insurance.

According to statistics from relevant departments, about 40% of men and 35% of women may develop cancer. About 75,000 Canadians suffer from heart disease each year, and about 50,000 Canadians have an unfortunate stroke, 33 per cent of whom are under the age of 65. In fact, anyone can be unfortunate enough to suffer from a common serious illness, but thanks to the advancement of modern medicine, more and more people can recover from serious illnesses. Therefore, the significance of the critical illness insurance plan is that when the insured suffers from an insured critical illness, the indemnity can be used to treat the critical illness or solve other family financial difficulties, so that the patient and family property can be buffered and focused on treatment and recovery.

How much does critical illness insurance cost? 

In general, the younger and healthier someone is, the cheaper your premium (cost). However, the critical illness insurance cost varies based on your current age, the insurance level, health condition, the insurance carrier, and the variety of illnesses covered.

It’s worthwhile to browse around for the best critical illness insurance deal. When doing so, you need to put somethings into consideration. Such as your income, dependents, financial commitments, as well as health-care demands. 

How can I make a claim?

You are can make a claim If you’re diagnose with the critical illness or disease covered by your insurance by a physician who is licensed to practice medicine in Canada and also specializes in the specific illness you’re diagnosed for. 

If my claim is approved, when will I receive payment?

In most cases, you will get a lump-sum compensation payment within 30 days after your claim has been processed.

There are also no limitations on how you may use the funds. The critical illness insurance coverage will expire right after your claim is settled. 

What happens if you don’t experience a critical illness?

The insurance costs you paid may be reimbursed to your designated beneficiary if you die based on a condition not insured by the critical illness insurance. Also, if the policy matures without a claim, some plans may refund the cost or a percentage of the insurance premiums paid over the policy’s lifetime.

What if I make a full recovery?

Even though you recover completely, you remain entitled to the entire benefit involved.

What is consider critical illness for insurance in Canada?

The covered conditions for critical illness insurance in Canada mainly include cancer, heart disease, stroke, kidney failure, Alzheimer’s disease, paralysis, Parkinson’s disease, severe burns, multiple sclerosis, major organ transplantation, benign brain tumors, blindness, deafness, coma, limb separation, coronary artery bypass Surgery, amyotrophic lateral sclerosis (ALS) and other motor neuron diseases, occupational-related human immunodeficiency virus (HIV), etc. A total of 25-26 illnesses are covered depending on the insurance company.

Is it worth getting critical illness insurance in Canada?

With the development of science and technology, the time from the onset of these serious diseases to death is getting longer and longer, and a considerable number of seriously ill patients eventually recover completely. During this period, a lot of funds are required to cover the treatment expenses amongst other things needed.

Therefore, you need a different policy than life insurance (which is paid after death) to get the benefits to cover your expenses until you recover from a serious illness. In Canada, we can see reports in newspapers and periodicals calling on everyone to raise funds for families in need.  To avoid this, a great financial planning need to spend a small amount of money to obtain protection in the event of serious illness, casualty, without calling for donations.

What does a critical illness policy cover?

A critical illness policy covers all necessary funds needed for the complete treatment of the insured diagnosed illness, such as paying for special treatment, home care, and paying a mortgage or personal loan; filling the gap between the government medical plan and real life inevitable economic gap. With a critical illness insurance plan, a one-time payment is provided when a serious critical illness or illness is diagnosed, reducing the sudden financial burden and worry of the family, reducing the financial hardship caused by the loss of income and the need for additional treatment costs or care due to critical illness. As well as the funds needed for medical treatment abroad.


Critical illness is worth it in Canada. Make sure you get the right kind of critical illness by talking to a financial professional. 

Critical illness coverage in Canada refers to critical illness insurance, which offers a benefit payout in the case where you are diagnosed with one of the covered critical illnesses such as cancer, heart attack, stroke, among many others. 

Critical illness insurance covers many types of life-threatening critical illnesses such as cancer, heart attack, or stroke. Many critical illness policies actually cover even more, so make sure you get the protection that’s right for you. 

It is absolutely worth getting critical illness insurance. The benefit payout can help you with the various costs of becoming critically ill such as loss of income and medical expenses. 

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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