First, let’s start by explaining what Critical Illness (CI) insurance is, and how it works.
With Critical Illness insurance, if the insured is diagnosed with any one of the illnesses listed in the policy, then the insured receives a tax-free lump sum equal to the amount of the insurance. Generally speaking, the lump sum is made 30 days after diagnosis, except for paralysis, in which case there is a 90 day waiting period.
Why is there a need for CI? Simply put, people are surviving life altering illnesses and living longer. CI was developed in 1983 by Dr. Marius Barnard. After assisting his brother, Dr. Christian Barnard, with the world’s first heart transplant, Dr. Barnard saw a need for a “living benefit” for people who survived major illnesses, and who faced a loss in income and unexpected expenses.
The numbers are staggering:
- 40,000 to 50,000 Canadians yearly have a stroke and 85% survive the initial incident
- 70,000 Canadians yearly have a heart attack and more than 80% of them when admitted to hospital survive
- 1 in 3 women in Canada will develop some form of cancer during their lifetime
- 2 in 5 men in Canada will develop some form of cancer during their lifetime
- The cancer death rate for both men and women has steadily been declining
Why Is Group CI Valuable To An Employer?
Now that we’ve discussed the importance of Critical Illness coverage, let’s look at why it ‘s valuable to an employer.
- Many Canadians cannot obtain individual CI coverage. When comparing the underwriting process for an individual life insurance application vs. the same process for an individual CI application, a CI application is much more closely scrutinized, and many times the coverage is declined. Conversely, group CI is a guaranteed issue product. Some insurance companies even allow for plan members to convert their group CI coverage to an individual CI policy when leaving the plan.
- Insurance is all about “spreading the risk”, and group CI is no different. In most instances, group CI is lower in premium than individual coverage – especially for those 45 or older, or for those who smoke.
- And finally, CI provides “peace of mind”. What would happen if one of your staff were diagnosed with cancer, but they were still able to work? They wouldn’t qualify for short or long term disability. But what about any expenses that they might encounter because of the cancer? With CI coverage, the employee won’t have to worry about the financial burden, and can concentrate on getting better.
In Canada, there are a number of insurance companies that offer group CI coverage, and all provide coverage for cancer, heart attack, and stroke. However, after that, there are many differences. The number of covered illnesses can range from 3-21 (depending on the insurance company). Some insurance companies include coverage for spouses. Others will even include coverage for children. With some insurance companies, coverage is mandatory (all eligible employees must participate), while with other companies, coverage is optional. And this is where we can help. We will help you navigate through the various group CI products to find the best product at the best premium.
If you would like more information on group Critical Illness coverage, please contact Chris Gory at either 416-754-3910/1-800-773-8638, or email at chris @ canadianemployeebenefitplans.ca.