Critical Illness Insurance
Critical illness insurance is a type of financial protection that pays a one-time, tax-free lump sum if you are diagnosed with a covered serious illness such as cancer, heart attack, or stroke. Unlike disability insurance, which replaces a portion of your income over time, critical illness insurance gives you a single payout that you can use however you choose - for medical expenses, household bills, recovery time, travel, or lifestyle adjustments.
Most Canadian insurers cover between 20 and 26 major conditions, although the exact list varies. Policies may include partial payouts for less severe conditions and a return-of-premium option if no claim is made. Some plans also include a “survival period,” requiring you to live for a certain number of days (usually 30) after diagnosis before benefits are paid.
This type of coverage is especially valuable when government or group health benefits do not cover all treatment costs, or when extended recovery impacts income and savings.
Example:
If you are diagnosed with a heart attack and meet your policy’s survival period, a $100,000 critical illness policy would pay the full $100,000 directly to you, which you could use for mortgage payments, home modifications, or out-of-country treatment.
What to Watch For:
Review the list of covered conditions, survival period requirements, and exclusions carefully. Some policies do not pay for recurrent illnesses or pre-existing conditions. Always confirm whether your coverage includes early-detection or partial payout benefits.
