Article January 23, 2019

Critical illness insurance: what you need to know

Recently, there has been a lot of discussion on the topic of critical illness insurance.

Did you buy your critical illness insurance through a certified advisor but aren’t sure what’s covered? Do you have questions but don’t know whom to ask? And what about your advisor’s obligations?

What is critical illness insurance?

Critical illness insurance guarantees individuals compensation in the event of one or multiple serious illnesses, subject to the restrictions in their insurance policy. A list of covered conditions is included in each policy, and the number of conditions depends on the provider and the specific product. If you suffer from one of these conditions while you’re covered by your critical illness insurance, the insurance provider will pay you a specific benefit as laid out in your policy. You can then use these funds to cover any number of expenses, like getting treatment abroad, paying for home care or retiring early.

Critical illness insurance is very specific about which conditions are covered, and the list varies from policy to policy. It’s important to be aware that not all serious illnesses are covered by this type of insurance.

Furthermore, in order to receive compensation, the insured’s diagnosed condition must meet the exact description set out in the policy and must not be subject to any exclusions (see below for examples of common exclusions from critical illness policies).

Conditions frequently covered by critical illness insurance:

  • Stroke
  • Heart attack
  • Life-threatening cancers
  • Severe burns
  • Blindness
  • Alzheimer's disease
  • Parkinson’s disease
  • Multiple sclerosis

Conditions commonly excluded from critical illness insurance:

  • Cancers that arise within the first 90 days of the policy’s effective date
  • Carcinoma in situ, including several types of cervical cancer
  • Stage T1A or T1B prostate cancer
  • Non-metastatic skin cancer
  • Illnesses resulting directly or indirectly from alcohol or drug abuse are also generally excluded.

How does critical illness insurance differ from disability insurance?

Disability insurance compensates policyholders for income lost as a result of incapacity for work caused by an accident or illness. The benefit amount never exceeds the insured’s total pre-disability income.

Who do I turn to if I have questions?

Insurance policies aren’t always easy to understand, so it’s highly recommended that you speak to a certified professional.

Never hesitate to ask your advisor questions. Most importantly, don’t try to interpret your policy yourself if you have doubts. Some commonly used words take on a different meaning when used in an insurance contract. In addition, definitions of covered serious illnesses can also vary from insurer to insurer.

While it may be humanly impossible for your advisor to know all the details and medical technicalities in your policy, they can consult with specialists who understand the ins and outs of these products. For example, there may be an expert at your advisor’s firm, or your advisor can contact the insurer directly and ask for explanations. If necessary, your advisor can also refer you to the relevant resource.

It’s your advisor’s role to explain what’s included and excluded in your insurance policy. They have a professional obligation to ensure that you understand the product you have purchased.

Best practices

Don't hesitate to ask your advisor to review your policy with you so that you understand its advantages as well as its limitations.

• Ask your advisor any questions you feel the need to ask, without censoring yourself.

• Get informed!

What if there’s a problem with my advisor?

If you have concerns about your advisor’s work, talk to them about what’s bothering you.

If the situation still doesn't improve, contact the firm or brokerage your advisor is affiliated with, if applicable, to try to speak to another representative or the manager.

You can also submit a formal complaint to the CSF.

Your advisor’s obligations under the CSF’s Code of Ethics:

12. A representative must act towards his client or any potential client with integrity and as a conscientious adviser, giving him all the information that may be necessary or useful. He must take reasonable steps so as to advise his client properly.

13. A representative must fully and objectively explain to his client or any potential client the type, advantages and disadvantages of the product or service that he is proposing to him and must refrain from giving information that may be inaccurate or incomplete.

14. A representative must provide his client or any potential client with the explanations the client needs to understand and evaluate the product or services that he is proposing or that he provides to the client.

Our experts are here to help you!

Got questions? Contact the CSF.