Consider critical illness insurance

Dear Mike: I just got life insurance and my agent offered me critical illness insurance as well. I thought it was just an add-on, so I declined. But I’ve been thinking about it since. Is it worth looking into?

A major illness can be a huge emotional burden for you and your family.
Don’t let it become a financial burden, too.
You can protect yourself against the potentially high cost of a serious illness with insurance.
Without this insurance, the odds are against you. Statistics show that at some point in their lives, most Canadians will face a life-threatening illness.
If you are the major income earner in your family, that’s bad financial news.
In fact, a major illness can place a greater burden on your family’s finances than your death.
Critical illness insurance provides a one-time tax-free lump-sum payment if you are diagnosed with an illness covered by the policy.
There are no restrictions on what you can do with the money, so it can be used to cover health-care costs, personal care services, lost income while you are unable to work or for any other purpose.
Of course, you may have other types of insurance to help with the cost of an illness.
Many Canadians have disability insurance policies, for example.
But while disability and critical illness insurance complement each other, your disability policy won’t pay benefits if you are still able to work.
Even if your illness prevents you from working, you might have to wait a number of weeks for your benefits to kick in.
And they may be limited.
Critical illness insurance offers coverage whether you are able to work during or after your serious illness.
Policies vary, but coverage typically includes cancer, heart attack, stroke, multiple sclerosis, kidney failure, blindness, Parkinson’s disease, Alzheimer’s disease and other serious life-altering illnesses.
These plans are offered by life insurance companies, and are generally available to those up to age 65 and in good health. You may be able to renew your policy until age 75 or for your lifetime.
Coverage generally ranges up to $1 million, although it may be possible to buy a larger policy.
The full benefit is available even if you recover from the illness.
But you must usually live for at least 30 days after an illness is diagnosed before the benefits are received.
When buying critical illness insurance, shop carefully. Coverage, exclusions, benefits and prices can vary.
Be sure that you aren’t excluded from coverage because of age or health - particularly by a previous illness.
And don’t look at critical illness insurance on its own. It should be part of an overall insurance plan that includes disability, long-term care and life insurance.
By ensuring you’re well covered, all your family’s financial needs will be met in the event of unexpected circumstances.
Your financial adviser can help determine the level of coverage that you need, and recommend a plan to meet your requirements.

Mike Watkins, CFP, FMA, FCSI, Ch.P., is a financial adviser with Edward Jones and author of the financial planning guide It’s Only Money. To ask a question, e-mail michael.watkins@edwardjones.com