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.

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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.

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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.

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Example:

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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.

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What to Watch For:

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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.