Wealth Strategies: Critical Illness - A critical point to consider

Critical Illness - A critical point to consider

We as a society are very much accustomed and willing to purchase insurance to protect our belongings, such as a home, car, jewelry, etc.  However, the same cannot always be said when it comes to protecting ourselves from the financial risk of a critical illness (CI); although it’s been found that we’re rather uneasy about the unprotected vulnerability of ourselves or a loved one suffering from a critical illness, the truth is many Canadians do not have the appropriate insurance coverage.  This issue was specifically researched in a joint study* by Great-West Life, London Life and Canada Life.  One staggering example of the study results concluded that “more than eight million working Canadians are at risk of going into debt, delaying retirement or downsizing their homes in order to survive financially if faced with a serious illness”.

Some of the key findings of the study were as follows:

1)Anxious

“Working Canadians know that the financial and emotional impact of a critical illness would be devastating. The main financial impacts are loss of income, inability to meet living expenses as well as the inability to pay a child’s medical bills.”

2)Aware

“Working Canadians are realistic about their risk of experiencing a critical illness - for many, it is an experience that hits close to home, as half know someone in their family who has suffered from a CI.”

3)Confused

“Misconceptions about critical illness and CI coverage are a key issue.”

“Not being able to spend quality time with their children (50% very worried) and not being able to live life to the fullest (49% very worried) are the biggest worries working Canadians have about becoming critically ill. If their partner became critically ill, over half of working Canadians (55%) would need to continue working to be able to cope financially”.

Now that we’re aware of some of the obvious risks and sentiment surrounding critical illness, it’s clear we need to address them.  Many Canadians, however, don’t fully understand the differences between the various forms of insurance* that would apply, such as critical illness whereby a lump sum is paid upon diagnosis of a specified illness, disability whereby the insured is disabled such that they’re unable to work in a full capacity, and lastly, long-term care to cover expenses of those that require assistance to perform basic daily activities such as bathing, dressing, etc. 

A closer review by a financial advisor and/or insurance agent of each household’s specific situation is therefore warranted, in order to determine both the type(s) of insurance** and amount(s) needed to protect against the financial risk of critical illness.

 

*Source: Critical Illness Insurance – Thought Leadership Research – A Summary of Findings, Sept. 14, 2015, James Wright & Melinda Head, Head Research

** Offered through Canaccord Genuity Wealth & Estate Planning Services