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what is critical illness insurance?
critical illness (ci) insurance pays out a non-taxable lump sum if a policyholder is diagnosed with a life-altering condition
3 minute read
some critical illness insurance plans cover only one illness (such as cancer); others may cover a few common conditions (for example, cancer, heart disease and stroke); while some cover a long list of serious illnesses and conditions.
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critical illness insurance was first sold in canada 30 years ago and is less well known than other kinds of insurance.
according to the canadian life & health insurance association, more than 2 million canadians have critical illness protection through individual or group plans, giving them greater financial choices in the event they are diagnosed with a serious condition.
what is critical illness insurance?
critical illness (ci) insurance pays out a non-taxable lump sum if a policyholder is diagnosed with a life-altering condition such as cancer, heart attack, stroke, multiple sclerosis or parkinson’s disease. the lump sum can be used for personal expenses related to the illness or for anything the policyholder chooses.
people who are already ill or have a pre-existing condition will generally not be eligible for critical illness coverage. most ci coverage providers specify a long list of illnesses and conditions that exclude a person from seeking coverage. these may include alzheimer’s disease, cancer, insulin-dependent diabetes, hiv-positive, heart attack, kidney failure and many more. family medical history can also be a relevant factor.
in most cases, people applying for ci coverage must submit to a medical exam and healthier applicants have lower premiums than those who are less healthy.
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what is the difference between critical illness insurance and long-term disability insurance?
you may wonder which is a better choice: critical illness insurance or long-term disability (ltd) insurance?
there are several ways in which critical illness coverage differs from long-term disability coverage. ltd benefits take the form of income replacement, typically paid monthly to a claimant; whereas ci plans pay out a lump sum payment when someone is diagnosed with a life-altering illness covered by their policy. the ci payment is tax-free and can be spent in any way a person sees fit.
something that both ci coverage and ltd benefits have in common is the fact that insurance companies sometimes unfairly deny coverage for persons who are legitimately sick or disabled.
critical illness insurance policies are not standardized and differ significantly between insurance providers. some plans cover only one illness (such as cancer); others may cover a few common conditions (for example, cancer, heart disease and stroke); while some cover a long list of serious illnesses and conditions.
when initially considering a policy, ask your broker about exclusions, before signing up to pay for a particular coverage. check the fine print of what is covered and be aware that there may be numerous exclusions in your policy.
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how do i get critical illness insurance?
you should also be aware that ci policies may also specify a survival period that must be met after the illness has been diagnosed before a payout will be made. for example, there may be a requirement that the claimant survives 30 days after diagnosis before receiving payment.
you can improve your chances of appealing a critical illness denial by taking numerous steps. first, review your insurance policy to understand the specific requirements and definitions. each policy may have different criteria, so it’s crucial to be familiar with the terms and conditions that apply to your situation.
secondly, gather all necessary medical documentation. this includes medical records, test results, and statements from your healthcare providers that detail your condition, treatment and prognosis. comprehensive and detailed medical evidence is essential to support your claim and demonstrate the extent of your critical illness.
claims can also be denied due to missed deadlines. insurance policies often have strict timelines for filing claims and submitting necessary documentation. if a claimant fails to adhere to these deadlines, the insurer may reject the claim on procedural grounds.
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one of the primary ways an experienced critical illness lawyer assists clients is by thoroughly reviewing the initial claim and the insurance company’s denial letter. this helps them understand the insurer’s rationale and pinpoint any weaknesses or gaps in the original application that need to be addressed.
he or she can gather additional medical evidence and documentation that can strengthen your appeal. this may involve obtaining detailed reports from healthcare providers, securing expert opinions, or collecting other relevant records that substantiate your critical illness, so you can ultimately receive the financial payout you deserve.
nainesh kotak is the founder of kotak personal injury law, a firm focusing on protecting their client’s rights to justice and obtaining the compensation their clients deserve. he was past chair of the long-term disability section of the ontario trial lawyers’ association.
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