Gaston Levesque realized that a serious illness could lead to financial ruin if it kept him off the job too long. After consulting his broker, Levesque bought a product recently introduced to the Canadian market: critical illness insurance. Levesque now 50 suffered a heart attack, the insurance saved the day. "I bought the policy to have salary insurance." Levesque runs a transportation service for the disabled. "I was off work for six months and I had bills to pay."
Critical Illness insurance was pioneered in South Africa by cardiac surgeon Marius Barnard, who assisted his brother, Christian, on the first successful heart transplant. Barnard was disturbed to see the lack of financial support for survivors of critical illness; Barnard started working with insurance companies to develop a new type of policy. While there are many variations on critical illness policies, most have common core features. The majority covers about 18 conditions, including heart attack, stroke, cancer, heart bypass surgery, Alzheimer's and Parkinson's and major organ transplants. Policies pay out a lump sum once one of the defined conditions has been diagnosed. Unlike other types of private medical insurance, there are no restrictions on what the lump sum can be used for. (The lump sum payment is tax free, although this policy is currently under review by the Canada Customs and Revenue Agency.)
For example, Canada Life's lifetime fixed premium policy with a benefit amount of $100,000 for a 40 year old female, non smoker would cost $996 annually, for a male non smoker of the same age, the annual premiums would be $1,167. One of the key advantages of the insurance is avoiding one of the big grey areas often associated with disability insurance: whether a policyholder is fit to return to work. The self-employed often have trouble proving the monthly salary replacements
They should be entitled to under salary insurance policies, policy holders use critical illness policy proceeds for extra nursing care or homemaker services, home renovations for wheelchair access, paying rent, a mortgage or car payments, a recuperative vacation, giving the working partner of the sick policyholder time off or paying for specialized medical care in another country. Canadians anxiety over the state of public health care is a major reason they are turning to extra insurance.
"We used to think that, as Canadians, we looked after our people. But people are starting to say, 'We will look after ourselves.'"
Great West Life introduced its version of critical illness coverage a year ago. Baby boomers are getting older and people are more aware of the risks of cancer, stroke and heart attack. Great West introduced new features that would include a return of 100 per cent of the premiums if the policyholder buys the policy for a set term and doesn't use it. For Gaston Levesque, getting extra insurance turned out to be a wise decision.
