A Guide to Critical Illness Insurance in Canada
Imagine youâve survived a scary life moment, like having a heart attack or being diagnosed with cancer. The odds of surviving most critical illnesses are good, but where would you find the money to pay for things not covered by insurance, like travel to and from treatment, meals away from home, lost income, or in-home care? There are a few options â but they arenât all good.
Let us help you find
the right insurance
What is critical illness insurance?
Think of critical illness insurance as the opposite of life insurance. This coverage pays out when youâre diagnosed with a condition (e.g., heart attack, stroke, cancer, multiple sclerosis, or kidney failure) and survive. Life insurance, on the other hand, pays out when you die. So the combination of life insurance and critical illness insurance protects you and your family in either scenario. Couple those with disability insurance and youâll have all the bases covered.
What are my options?
- Option 1. Cash in your investments. This isnât a great idea because it could take decades just to get back to where you are now financially.
- Option 2. Borrow money to cover expenses. This is also not ideal because you will have to repay it with interest, and you may be earning less during your recovery time.
- Option 3. Cash the tax-free cheque you get from your critical illness insurance policy and breathe a huge sigh of relief.
Winner! Option 3 allows you to keep your savings in the bank, avoid debt, and receive a lump sum of cash that you can use as you see fit. Thatâs what makes critical illness insurance so appealing to many Canadians.
How critical illness insurance works in Canada
If you are diagnosed with a qualifying critical illness, â meaning one thatâs covered by your policy â you make a claim and, assuming all policy criteria is met, the insurance provider will issue a one-time, tax-free payment that you can use, or not use, any way you want. For example, you may need some of the cash for things not covered by your government health plan, like:
- Physiotherapy, massage therapy, counselling, etc.
- Private clinic treatments and services
- Wigs and prosthetics
- Caregiving services in your home
- Modifications to your home to improve accessibility
If you donât need all the money, youâre free to invest it for the future, take a vacation to celebrate your recovery, or pay down your mortgage. Itâs yours to spend freely.
Who should consider critical illness insurance?
Anyone can be struck with a critical illness at any time, but critical illness insurance should be a priority for:
- Self-employed people with no access to group coverage
- Anyone who would suffer financial hardship if they had to pay out-of-pocket expenses
- Anyone with a family history of one or more qualifying illnesses
- Young families who rely on two salaries to pay the mortgage, as well as the day-to-day expenses of raising children
Even if you have insurance through a group benefits plan at work, you should ask yourself whether itâs enough.
What illnesses are typically covered by critical illness insurance?
Critical illness insurance from Serenia Life covers 26Â conditions like heart attacks, strokes, and cancers. In addition, it covers 7Â childhood illnesses.
Critical illness insurance vs other types of coverage
Critical illness insurance is called a âliving benefitâ because you get the payout while youâre still alive. Disability insurance is also a living benefit, and there are many advantages to life insurance while you’re still around to enjoy them. For a detailed look at how living benefits pay off while youâre alive, check out our complete guide.
In the meantime, hereâs a quick comparison to show you how life insurance, critical illness insurance, and disability insurance work together to form a complete suite of financial armour within a family life insurance plan.
Type of Insurance | When it pays out | Whatâs covered | Payout type |
|---|---|---|---|
Critical Illness Insurance | Upon diagnosis of any qualifying illness listed in your policy. | Common illnesses such as heart attack and stroke. See the full list. | One-time, tax-free, lump-sum payment. |
Disability Insurance | As soon as you canât work due to illness or injury | Any physical or emotional impairment that prevents you from working. | A percentage of your current income, typically around 65 per cent. |
Life Insurance | Upon your death, typically in a matter of days. | The death benefit (i.e., a payment made to designated family members or other loved ones after you die) is determined by the amount of coverage you purchase. | One-time, tax-free, lump-sum payment to your beneficiaries (i.e., the persons you choose to receive your life insurance payment in the event of your death) |
Comparing critical illness insurance in Canada
Shopping for the best critical illness insurance is easier with the advice of a licensed agent who can help you balance the cost of coverage with the right combination of benefits. They will typically help you as you consider things like:
- Exclusions and definitions
Insurance providers have the right to exclude things from your coverage, like illnesses brought on by lifestyle or substance abuse. Pre-existing medical conditions can also make it more difficult and expensive to buy critical illness insurance. - Waiting periods and survival clauses
Certain critical illnesses have waiting periods, and some of them have a âsurvival clause,â which means you need to survive typically 30 days from the date of the diagnosis to get the payout. - The cost
If one insurance quote is significantly less than another, ask your advisor why. When it comes to lower cost, there can be a trade-off. For example, there may be additional exclusions or fewer features. Determining good value is part of the research process when you shop for insurance. - Return of premiums
Some insurance providers will offer you a Return of Premium (ROP) rider (i.e., an add-on or extra feature you can attach to your policy at the time of purchase to customize it). It costs more to have this feature, but it means the money youâve paid into the policy gets returned if you make no claims before the policy expires, you cancel it, or if you die before using it. How and when your money gets refunded varies by policy.
Tips for buying critical illness insurance in Canada
- Use a licensed insurance broker or financial advisor
- Include at least one major Canadian insurer when comparing costs
- Ask about discounts for bundling critical illness and disability insurance
How much critical illness insurance do I need?
Critical illness insurance was created to help you cover the cost of living after your diagnosis. Because you canât predict what kind of illness you might be diagnosed with, or how it will affect your ability to earn a living, you need to make some assumptions about how your financial situation will change and how much money youâll need.
Add up what it costs to live right now. Include the following: |
|
|---|---|
Monthly expenses | $_________ |
Monthly debt payments | $_________ |
Family support | $_________ |
The cost of recovery | $_________ |
Grand total (per month) | $_________ |
Once you have an estimate of your monthly costs, multiply it by six months or a year, then review your findings with a licensed agent.
Is critical illness insurance worth it?
When you add up the advantages of critical illness insurance and weigh that against the risk to your wealth, the answer is usually a resounding yes. That said, some people have alternative means to get them through the recovery phase of illness and feel they donât need critical illness insurance. Hereâs a quick summary to help you decide.
When is critical illness insurance worth it? | When is critical illness insurance not necessarily worth it? |
|---|---|
You have limited savings | When out-of-pocket expenses will not derail your financial plan |
You canât predict the future or if youâll get diagnosed with a critical illness. What you can do is put up a wall of defense that will always be there to protect you if the unexpected happens and you do take ill.
A Serenia Life advisor can help you create or update your family insurance plan and show you how life and critical illness insurance can be combined to set your mind at ease and protect your familyâs wealth.
What is the cost of critical illness insurance?
Similar to any other kind of insurance, your premiums (i.e., the amount you pay for an insurance policy) are going to be based on a combination of your age, gender, lifestyle, and any existing medical conditions.
For example, a healthy, non-smoking 30-year-old with $75,000 in coverage might pay between $25 and $45 a month. At age 40, the same policy could cost $50 to $80 a month.
Helen’s Story
As a single mom in her working years, Helen was considering the need for critical illness insurance â she didnât want an illness to derail her finances, especially while her young children were still dependent on her. What bothered Helen was the idea of investing all that money into a policy she may never use, but after her advisor told her about the Return of Premium upon Expiry feature, she decided there was nothing to lose.
She purchased $75,000 in affordable critical illness coverage with the additional âmoney-back featureâ for a few extra dollars a month.
At age 75, Helenâs policy expired, and because she had never received a payout, she got all of the money she paid for her coverage back.
With this coverage, Helen enjoyed:
- Peace of mind, knowing she could cover her rent, pay for child care, and put food on the table if a critical illness were to hit
- Passing on the wealth to her grandchildren once she received her payments back in a nice lump sum
In her words:
âFor a few extra dollars a month, I added a money-back feature to my critical illness coverage. Lucky for me, I never had a critical illness, and my policy has now expired â which means I have a large sum of money that Iâm going to use to help my grandchildren cover their post-secondary tuition costs.ââŻ
Sarahâs Story
Sarah, a 42-year-old marketing consultant from Ontario, was living a busy life balancing her freelance business, a mortgage, and two young kids. She and her partner both had term life insurance because they knew that neither one would be able to maintain their standard of living on a single salary.
Further reading
Find out why every mom absolutely, positively needs life insurance
Sarah had also purchased a $75,000 critical illness insurance policy in her early 30s. Her age and good health made the premiums very affordable. Early last year, she was diagnosed with breast cancer. While her treatment was largely covered by OHIP, her provincial healthcare plan, she quickly faced unexpected costs:
- $3,000 in travel and accommodation for a specialist clinic out of town
- $8,000 in lost income due to a reduced work schedule
- $1,500 for medications not fully covered
- Ongoing costs for child care during appointments and recovery
She submitted a critical illness insurance claim shortly after diagnosis. Following a brief waiting period, she received a tax-free, lump-sum payment of $75,000. She was pleasantly surprised that the process was hassle-free, and she was able to:
- Take three months off work to focus on recovery
- Cover non-insured medical and travel expenses
- Hire short-term help for the kids
- Set aside emergency funds in case of a recurrence
In her words
âThe lump sum gave me peace of mind. I didnât have to stress about money while dealing with cancer. It let me choose what was best for my health and my family, not just what I could afford.â
Benâs Story
Ben, a 31-year-old HR Specialist in Calgary, was working full-time for a mid-sized company. Â At the time, he had no children, lived alone in a rented apartment, and had group benefits through his employer.
Although he had some coverage, Ben decided to purchase an additional $75,000 in critical illness insurance after watching a close friend struggle financially during cancer treatment. His reasoning was simple: âIf I ever get sick, I want options â not stress.â
Seven years later, at the age of 38, Ben was diagnosed with multiple sclerosis (MS) after experiencing issues with movement and numbness in his legs. The diagnosis was a shock because heâd always been active and healthy.
Further reading
You may have group benefits, but is it enough? Find out.
His provincial health plan covered most of the basic care, but his needs went beyond clinical treatment. He also needed money for:
- Time off work during flare-ups
- $5,000 in home modifications for mobility support
- $3,500 annually in medications not fully covered by insurance
- Ongoing expenses for physiotherapy and mental health counselling
He submitted a critical illness insurance claim through his group policy at work and another through his personal plan. The additional $75,000 was a game-changer that helped him:
- Take extended unpaid leave from work without financial worry
- Make modifications to his home and lifestyle
- Cover long-term treatments without dipping into savings
- Keep his independence while focusing on adapting to his new reality
In Benâs words
âI didnât buy this policy thinking Iâd ever need it â it was more like a backup plan to my backup plan at work. But when MS turned my life upside down, that cheque gave me choices and dignity. It let me take time off, get the care I needed, and still stay financially stable.â
Why choose Serenia Life for critical illness insurance?
At Serenia Life, insurance isnât just a product â itâs a promise backed by nearly a century of trust, compassion, and community values. Whether youâre protecting your loved ones with life insurance or securing your future with critical illness coverage, weâre here to help you plan with purpose.
When you choose Serenia Life, you’re joining a mission-driven community. Members gain access to meaningful benefits that support their life goals:
- $2,500 post-secondary scholarships
- Up to $600 towards fundraising events and up to $400 to cover volunteering expenses in Canada
- Financial support for legal wills through a lawyer
- And much more!
View a full list of our member benefits
Weâre here to help you and your loved one protect all the things youâve worked so hard to build. Critical illness insurance is just one way we can help ensure you have the time and money to focus on your recovery â not your finances.
Talk to a Serenia Life advisor about making critical illness coverage part of a complete family life insurance plan today.
