06 Jul Critical Illness Insurance – Do you really need it?
Did you know that there is a one in five chance of you winning the lottery before you retire? Getting excited? Think it’s just a matter of time before you win? Think again, it’s not going to happen – but it got you thinking!
Now think of the same odds but this time about bad news. There is a 1 in 5 chance for men and a 1 in 6 chance for women that a long-term critical illness will prevent them from working. Sorry – this time it’s true. Insurance cannot change those odds but it can alleviate the potential financial wreckage caused by being unable to work through long-term illness and still having a family and home to support.
Convention declares that the main income earner in each family should have life insurance. It’s easily understood, it’s accepted and most people you know probably have it too. But what about critical illness insurance? Chances are, not many of the people in your family and circle of friends even know about critical illness insurance. Given the odds of contracting a critical illness in your lifetime, why do so many people not know there is an insurance policy designed for this very event?
In May 2013, The Canadian Cancer Society published a document titled “Cancer Facts from Canadian Cancer Statistics 2013“. The document contained the following information:
- An estimated 48,700 new cancer cases will be diagnosed Quebec (187,600 in Canada) – not including the cases non-melanoma skin cancer
- Cancer will cause an estimated 20,200 deaths (75,500 in Canada)
- More than half (52%) of newly diagnosed cases will involve prostate, lung, breast or colorectal cancers
- Nearly 88% of new cancer cases and 95% of cancer-related deaths in Canada will occur among people aged 50 and older
- In Canada, the largest proportion of new cancer cases (28%) will occur among people aged 60 to 69 years; and the largest proportion of cancer deaths (34%) among people aged 80 years or more.
The fourth point is worth noting again – Nearly 88% of new cancer cases and 95% of cancer-related deaths in Canada will occur among people aged 50 and older. Most people are working well into their 60’s in order to afford to retire with a reasonable amount of retirement savings so they are still prime earning years of your life. Being covered by insurance for a life changing event that is more likely than not going to happen is vitally important for you and your family.
For those few who know about critical illness insurance, the usual reason given for not being covered is cost. Yes, it is more expensive than life insurance but it is providing cover for a greater risk. You’re much more likely to experience a critical illness than die before your normal retirement age. The average age for a critical illness insurance claim is 47 years old. So clearly there is much more to the public’s resistance.
Not understanding the risks or “head in the sand syndrome” are certainly major factors. After all Alzheimer’s disease, bacterial meningitis, brain tumors and leukemia plus the long list of other illnesses typically covered by critical illness insurance, are not matters we care to think of nor know much about.
Could there be another reason? There have been repeated newspaper articles about people who claim on their critical illness policy only to have it turned down on an apparent technicality – the inference being that the insurance company cannot be trusted.
Yes insurance companies do make mistakes, but more often than not the claim was invalid from the outset. There are two main causes.
Firstly, the policyholder is claiming for an illness that is not one of the critical illnesses scheduled in the policy documentation. Regrettable, but it’s a fact that if the illness is not listed it isn’t insured and the policy won’t pay out. The moral is to closely compare the illnesses covered by competing insurance companies and buy the one with the most extensive coverage of illnesses. If you don’t, Murphy’s law will most likely prevail.
The second major reason for refusal is a failure to disclose all relevant matters on the original application form. For example, if the applicant fails to disclose in response to the insurance company’s questions that his father had died of a heart attack aged 50 or that he is having medical tests for headaches, then the insurance company will wrongly assess the risks it is being invited to insure. Had the insurance company known this extra information they might have increased the premium, or asked the applicant to go for a medical examination, or waited for the outcome of tests, or even refused to provide cover. By failing to disclose, the applicant has effectively obtained cover on false pretenses or at least on inaccurate information.
Thereby lies the second moral. Always provide the truth and the full truth on your application form. Anything remotely relevant to your medical condition must be disclosed.
All this points to the need for professional insurance advice. Critical illness policies do vary and it can take an experienced eye to evaluate the best policy for your circumstances and pocket. This doesn’t mean that you have to miss out on the discounted premiums available online. At Signet Financial, we have access to critical illness policies provided by some of the largest and well-known insurance providers in Vancouver, British Columbia and Canada. Contact us today to help put your mind at ease and talk to us about your critical illness insurance needs or request a quote and we will get back to you with some information regarding possible Critical Illness Insurance policies that may suit your situation.