Personal Finance

Critical illness insurance, does it worth?

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[OP]
Newbie
Apr 26, 2013
80 posts
3 upvotes
Burnaby, BC

Critical illness insurance, does it worth?

I need some opinion/advice on insurance for critical illness from anyone here who has CI insurance or have thought about getting it before. I personally have no experience on dealing with insurance at all. I have been thinking about it lately since my mortgage have been increased by 400k after we bought a new place, and basically I don't have much savings left other than the funds in my RRSP which isn't a lot. I already have plans on getting a term 30 life insurance which isn't too bad, roughly 100 dollars cover both me and my wife. However a permanent critical insurance is very expensive, it costs almost 350 just myself alone for a 150k coverage, which equals to 2 years of my income before tax deduction(I make 65k-70k annually). The insurance advisor suggested me to get a T10 which costs me around 100ish dollars if I remember correctly... it doesn't seem practical to me to get a T10 CI when I am only 35 years old...correct me if I am wrong. Does it worth to get a permanent CI insurance that costs so much in my situation? I wanted to pay off my mortgage ASAP, but then in the meanwhile I also want to insure myself, especially my family just in case things happen. Should I forget about getting CI at all? Should I reduced the insured amount? Any advice would be appreciated.
34 replies
Deal Fanatic
Feb 15, 2006
9041 posts
3630 upvotes
Toronto
If your job provides health & dental benefits, you usually don't need this critical illness insurance.

If you have life insurance, you are also less at risk.

If you don't have either, it's still better to get life insurance, but that will be your choice.

It's an insurance. They exist because some people want it and buy it. But it's not as important as having health & dental, or life.
Deal Fanatic
User avatar
Apr 20, 2011
5310 posts
484 upvotes
Vancouver
will101 wrote: I need some opinion/advice on insurance for critical illness from anyone here who has CI insurance or have thought about getting it before. I personally have no experience on dealing with insurance at all. I have been thinking about it lately since my mortgage have been increased by 400k after we bought a new place, and basically I don't have much savings left other than the funds in my RRSP which isn't a lot. I already have plans on getting a term 30 life insurance which isn't too bad, roughly 100 dollars cover both me and my wife. However a permanent critical insurance is very expensive, it costs almost 350 just myself alone for a 150k coverage, which equals to 2 years of my income before tax deduction(I make 65k-70k annually). The insurance advisor suggested me to get a T10 which costs me around 100ish dollars if I remember correctly... it doesn't seem practical to me to get a T10 CI when I am only 35 years old...correct me if I am wrong. Does it worth to get a permanent CI insurance that costs so much in my situation? I wanted to pay off my mortgage ASAP, but then in the meanwhile I also want to insure myself, especially my family just in case things happen. Should I forget about getting CI at all? Should I reduced the insured amount? Any advice would be appreciated.
Life insurance is for the selfless - the benefits go to someone else
Critical illness for the selfish - the benefits are for yourself lol-- with CI even if you're the healthiest person and dont' get any of the covered illnesses then when you're at a certain old age over 70 or so you get all the premiums back,. and if you pass away for another reason not related to the covered things, your heirs get the premiums back.
Deal Fanatic
User avatar
Jan 31, 2006
7674 posts
2104 upvotes
Toronto
Critical illness insurance have clauses that not easy to attain like you can a payoff if the beneficiary survive (e.g. cancer) 30/45/60 days after he/she was diagnose, it is not just when you have CI then a payout will happen.
Deal Addict
Oct 7, 2011
1098 posts
418 upvotes
Toronto
Be careful with all the exclusion clauses, especially with any existing conditions.
Sr. Member
Jul 26, 2007
581 posts
52 upvotes
Cancer can strike seemingly healthy individuals. An extra 100-150K can be very helpful if you need to take time off, travel to the States for experimental treatments, etc. Your disability coverage may only be 50-60% of salary. If you get cancer, who's going to take care of you and the kids? With 100-150K, your spouse would be able to take time off work to take care of the household while you seek/obtain treatment. Very life threatening cancer struck in my family not too long ago (in fact, the real state of the cancer was only diagnosed when they went to the States to seek recruitment for a trial). They had to rely on a line of credit to get through instead of a CI policy. People on here will say to put that money in your investments instead of insurance and to get a HELOC/LOC instead, but that's a decision only you and your family can make.

Even if you do survive your illness, your capacity to be employed may be eliminated or reduced severely. Your ability to pay back your LOC may be a burden your family will never overcome. Fortunately, the people in my family that were affected are doctors themselves, so they'll be okay. If you're an average worker, your ability may be much more limited.

It's expensive and hard to obtain for a reason: the chances of payout for an insurance company are higher.
Deal Addict
Jul 23, 2014
1240 posts
407 upvotes
Toronto, ON
Cancer can creep up on anyone... the fact that some of us are living with it right now without knowing until it gets to a breaking point and then doctors send you in to get checked out with a MRI. In a utopian world, we should be getting full body MRI scans every year (with check ups) for earlier detection and prevent cancer from spreading but of course the cost probably is astronomical to do that for every citizen.

My best friend died of brain cancer two years ago... the doctors were saying that the tumour has been in his skull for the last 10 years and growing slowing until it got to a point that it put pressure onto his brain that started to affect his speech which prompted him to go in and get a MRI scan. They immediately performed surgery to remove what they could and then went through aggressive chemo and radiation. He unfortunately lost the battle to cancer after a year of fighting at the early age of 35. I always wondered if doctors detected it early, would he able to able to live a longer life?

Anyways, I am a huge advocate for CI (after my friend's passing). He never believed in CI (he worked in the financial industry), however, he and his wife had the resources/work insurance/OHIP to help them through the situation, however he never choose to fly to the US for treatments. After that experience, I felt that if either my wife or I were to fall ill, I'm sure we'd be able to barely get by but the stress and worrying on the financial end would cause a lot of headaches.

You never know what would happen, you may feel healthy now, but like my friend, was living with a tumour for the last 10 years and never felt any different until near the end. Better safe than sorry and especially if you have a family. Ask yourself if that "potential" gain of investing it instead worth leaving you scrambling if you do fall ill?
Jr. Member
Jul 10, 2007
144 posts
48 upvotes
Ottawa
Cavegirl wrote: Be careful with all the exclusion clauses, especially with any existing conditions.
Can you elaborate on this a bit further? I have critical illness insurance with an exclusion clause from a pre-existing condition.

I've always thought that the insurance company will somehow use that against me as a basis to deny pretty much any type of claim.
Deal Fanatic
User avatar
Apr 20, 2011
5310 posts
484 upvotes
Vancouver
RFD6482 wrote: Cancer can creep up on anyone... the fact that some of us are living with it right now without knowing until it gets to a breaking point and then doctors send you in to get checked out with a MRI. In a utopian world, we should be getting full body MRI scans every year (with check ups) for earlier detection and prevent cancer from spreading but of course the cost probably is astronomical to do that for every citizen.

My best friend died of brain cancer two years ago... the doctors were saying that the tumour has been in his skull for the last 10 years and growing slowing until it got to a point that it put pressure onto his brain that started to affect his speech which prompted him to go in and get a MRI scan. They immediately performed surgery to remove what they could and then went through aggressive chemo and radiation. He unfortunately lost the battle to cancer after a year of fighting at the early age of 35. I always wondered if doctors detected it early, would he able to able to live a longer life?

Anyways, I am a huge advocate for CI (after my friend's passing). He never believed in CI (he worked in the financial industry), however, he and his wife had the resources/work insurance/OHIP to help them through the situation, however he never choose to fly to the US for treatments. After that experience, I felt that if either my wife or I were to fall ill, I'm sure we'd be able to barely get by but the stress and worrying on the financial end would cause a lot of headaches.

You never know what would happen, you may feel healthy now, but like my friend, was living with a tumour for the last 10 years and never felt any different until near the end. Better safe than sorry and especially if you have a family. Ask yourself if that "potential" gain of investing it instead worth leaving you scrambling if you do fall ill?
In Japan many people get them yearly just for the sake of doing it since it costs only a few hundred.
Sr. Member
Jul 26, 2007
581 posts
52 upvotes
Even if your CI policy costs you $100/month, what is the value of that in an investment that returns 10% YOY over 10 years? Not nearly enough to cover the cost of a CI policy payout. You actually have decent chance of surviving a CI, but the problem is that your quality of life suffers - whether through lifelong disability, decreased cognitive functions, etc. These will likely limit your future ability to earn an income. Disability insurance can only take you so far - CI fills a gap for other expenses that disability insurance is unable to cover. What happens if your wife has to take stress leave? What happens if your wife gets cancer, needs radiation, and wants to have children? Her disability coverage will not cover the cost of egg extraction. These are the types of things that CI payouts can be used for.

I agree with the previous poster that piece of mind is sometimes worth paying for, particularly if you're in your vulnerable years with a new mortgage and raising a young family.
Sr. Member
Sep 23, 2013
517 posts
300 upvotes
Windsor, Ontario
jramnari wrote: Can you elaborate on this a bit further? I have critical illness insurance with an exclusion clause from a pre-existing condition.

I've always thought that the insurance company will somehow use that against me as a basis to deny pretty much any type of claim.
The insurance company will only decline what they state is a "Pre-existing condition" when the contract is first approved. So if you have heart problems and have a heart attack, they won't pay the Critical illness payout for a heart attack, because it's connected to the "pre-existing conditions".

In terms of "exclusions" based on pre-existing conditions, you'll know this all when the contract is issued. Insurance companies do all of their underwritten before issuing the contract, so if they give you an approval knowing everything about your medical history, they can't go back on it at a later date. But again, if they put an exclusion in they won't pay out for the exclusion, you will know all of this when the contract is issued though.

Banks however do things differently.
Deal Addict
User avatar
Apr 15, 2011
1484 posts
380 upvotes
The exclusions are awful on critical illness.

Also look how many primary conditions MUST be present for payout to occur. (ie) loss of sight and simultaneous loss of motor skills or something crazy like that.

I checked out sunlifes occur through my employer and wasn't impressed
Sr. Member
Jul 26, 2007
581 posts
52 upvotes
daikman wrote: The exclusions are awful on critical illness.

Also look how many primary conditions MUST be present for payout to occur. (ie) loss of sight and simultaneous loss of motor skills or something crazy like that.

I checked out sunlifes occur through my employer and wasn't impressed
I don't agree, at least not with our policies. Our family has CI coverage with Manulife with the optional coverage for 22 additional conditions. The only glaring exclusion was prostate cancer. Other exclusions are possible, but are typically made known after your medical exam before you sign on.

It's best to explore the various policies available through an insurance broker. For the OP, if you're going to get life insurance, you might as well at least apply for CI because it doesn't cost anything extra and you'll only be examined once if you apply for both policies with the same company. Depending on what happens with the medical exam, you may not qualify for CI (as I said, it's not easy to obtain if you have a family history of illness or pre-existing conditions.)
Sr. Member
Apr 2, 2009
851 posts
231 upvotes
RFD6482 wrote: Cancer can creep up on anyone... the fact that some of us are living with it right now without knowing until it gets to a breaking point and then doctors send you in to get checked out with a MRI.

You never know what would happen, you may feel healthy now, but like my friend, was living with a tumour for the last 10 years and never felt any different until near the end. Better safe than sorry and especially if you have a family. Ask yourself if that "potential" gain of investing it instead worth leaving you scrambling if you do fall ill?
As someone who was recently just diagnosed with cancer I can attest to this. I have a 10 cm mass that had apparently been growing for years with zero symptoms or signs that it was there. I am extremely healthy and fit. I don't/smoke or drink and I go to the gym 4-5 times a week

I was extremely lucky in finding out and the Urologist called it a "fluke" it was discovered. It very well could have gone on for several more years and then it would have been fatal. Luckily it has not spread and I go for surgery on Monday. I have been told I will be out of commission for about 6-8 weeks. We don't need the money but a lot of families would be crippled after 2 months of no income
Sr. Member
Sep 23, 2013
517 posts
300 upvotes
Windsor, Ontario
will101 wrote: I need some opinion/advice on insurance for critical illness from anyone here who has CI insurance or have thought about getting it before. I personally have no experience on dealing with insurance at all. I have been thinking about it lately since my mortgage have been increased by 400k after we bought a new place, and basically I don't have much savings left other than the funds in my RRSP which isn't a lot. I already have plans on getting a term 30 life insurance which isn't too bad, roughly 100 dollars cover both me and my wife. However a permanent critical insurance is very expensive, it costs almost 350 just myself alone for a 150k coverage, which equals to 2 years of my income before tax deduction(I make 65k-70k annually). The insurance advisor suggested me to get a T10 which costs me around 100ish dollars if I remember correctly... it doesn't seem practical to me to get a T10 CI when I am only 35 years old...correct me if I am wrong. Does it worth to get a permanent CI insurance that costs so much in my situation? I wanted to pay off my mortgage ASAP, but then in the meanwhile I also want to insure myself, especially my family just in case things happen. Should I forget about getting CI at all? Should I reduced the insured amount? Any advice would be appreciated.
Just for clarification, you're 35 years old and you got quoted $100 a month for a T10 CI policy? That seems very expensive, is there something I'm missing? And yes, critical illness insurance in your situation (assuming you have long term disability insurance in place) is pretty important, second time life insurance.
Sr. Member
Sep 23, 2013
517 posts
300 upvotes
Windsor, Ontario
daikman wrote: The exclusions are awful on critical illness.

Also look how many primary conditions MUST be present for payout to occur. (ie) loss of sight and simultaneous loss of motor skills or something crazy like that.

I checked out sunlifes occur through my employer and wasn't impressed
Work plans are generally different than individual policies. Those "primary conditions" do not appear in individual policies. What exclusions you will see are "cancers" like a melanoma that is easily removed and your on your way. Essentially for a critical illness insurance policy to pay out, you have to be really sick - not just a "cancer" that is easily curable and takes an hour procedure to remove. That being said, everyone I've known who has been diagnosed with cancer would have received a CI payout, had they had a policy.
Deal Addict
User avatar
Apr 15, 2011
1484 posts
380 upvotes
SteveDfsin wrote: Work plans are generally different than individual policies. Those "primary conditions" do not appear in individual policies. What exclusions you will see are "cancers" like a melanoma that is easily removed and your on your way. Essentially for a critical illness insurance policy to pay out, you have to be really sick - not just a "cancer" that is easily curable and takes an hour procedure to remove. That being said, everyone I've known who has been diagnosed with cancer would have received a CI payout, had they had a policy.
Oh I had no idea, thanks for clarifying. Cheers.
[OP]
Newbie
Apr 26, 2013
80 posts
3 upvotes
Burnaby, BC
SteveDfsin wrote: Just for clarification, you're 35 years old and you got quoted $100 a month for a T10 CI policy? That seems very expensive, is there something I'm missing? And yes, critical illness insurance in your situation (assuming you have long term disability insurance in place) is pretty important, second time life insurance.
I don't exactly remember how much the advisor said about the T10 CI. But then I would think it makes more sense to get a permanent CI.. As there are chances I may use it in the future, like you guys said.. who knows what happen tomorrow? I really don't see much point to get a T10. I am thinking of reducing it to 100K if I do get it to reduce the cost, what do you guys think? I still haven't ask how much a 100k CI cost yet, but I probably will ask when I see the advisor again next time after I do all the medical test. How many years of income should a CI cover? Is 2 years of income too little?
Arrgh wrote: If your job provides health & dental benefits, you usually don't need this critical illness insurance.

If you have life insurance, you are also less at risk.

If you don't have either, it's still better to get life insurance, but that will be your choice.

It's an insurance. They exist because some people want it and buy it. But it's not as important as having health & dental, or life.
I get health & dental benefits from my wife's work.... but that doesn't have anything to do with critical illness insurance isn't it???
Sr. Member
Sep 23, 2013
517 posts
300 upvotes
Windsor, Ontario
will101 wrote: I don't exactly remember how much the advisor said about the T10 CI. But then I would think it makes more sense to get a permanent CI.. As there are chances I may use it in the future, like you guys said.. who knows what happen tomorrow? I really don't see much point to get a T10. I am thinking of reducing it to 100K if I do get it to reduce the cost, what do you guys think? I still haven't ask how much a 100k CI cost yet, but I probably will ask when I see the advisor again next time after I do all the medical test. How many years of income should a CI cover? Is 2 years of income too little?



I get health & dental benefits from my wife's work.... but that doesn't have anything to do with critical illness insurance isn't it???
I hate talking in "general rules", but generally speaking 75%-125% of your gross income is a good indicator of how much coverage you should have. $100,000 is a good number, have the advisor compare it to $150,000, etc. It is ideally better to have a permanent CI plan, as costs rise quickly once you hit the 50+ age bracket. That being said, you also have to be practical, the longer the period of CI coverage, the higher the premiums. Try not to look at it like you're buying an object, this is something you "purchase" that has to fit in with the rest of your budget. So while it would be nice to have coverage with protection until age 65, 75 or 100, only you can truly know what you can or cannot afford (or your advisor should be able to help you figure it out).

It is next to impossible to estimate the amount of money you would need following a critical illness. There are too many variables, for example, you might be laid up for years after being diagnosed with cancer, there may be a lot of medication co-payments, trips back and forth between various hospitals. Or... you may be out of commission for 2-3 months and make a quick recovery and back to work you go.

Health and Dental cover the medication (if needed) following a critical illness along with various consultations specialist visit, etc. Health and Dental insurance doesn't cover trips (gas and travel to specialists), medication co-payments, consultations for things not covered. One of my cancer survivor clients visited alternative medical specialists, not covered under their work plan, she also visited and paid out of pocket to specialists in the states.

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