DO NOT USE CRITICAL ILLNESS INSURANCE TO FUND CARE OUTSIDE OF CANADA – OR THROUGH THE PRIVATE SYSTEM!

One of the points I almost always see mentioned in any company’s Critical Illness (CI) presentation is some version of, “You can use the funds to purchase private care.” Every time I see that I cringe because this statement is largely responsible for provoking the reaction, “What is $100,000 worth to me? It will not pay for ANYTHING!”

The whole purpose of my blog is to show that there are much better and more affordable options available.

Before I go further, let’s get the shock out of the way (and by this I am referring to why we are not selling as much Critical Illness insurance as we should be).

Most people seem to think: “If I need care, I will need $1,000,000”

Using data for a 40-year-old male, non-smoker, as an example, we obtain care in the US – or the private system in Canada – with $1,000,000 of Critical Illness insurance.

There are 4 basic pricing approaches (ignoring Return of Premium, which is a whole other topic).

                                             $1,000,000 Critical Illness Insurance

Plan	Annual Premium
10 Year Renewable Term	$4,215.00
20 Year Renewable Term	$6,425.00
Level Term to Age 75	$10,465.00
Level Term to Age 100	$13,555.00

If you can afford those premiums, feel free to buy the coverage, however, the vast majority of 40-year-olds have other demands on their income, and cannot afford this kind of premium.

What options are available?

Option A - $250,000 Critical Illness insurance in place of $1,000,000. $250,000 is adequate for 98% of the population. Only the wealthy – and some corporate situations – may require more than this.

Plan	Annual Premium	EHO* Premium	Total Premium
T-10	$1,110.00	$2,007.00	$3,117.00
T-20	$1,662.50	$2,007.00	$3,669.50
T-75	$2,672.50	$2,007.00	$4,679.50
T-100	$3,445.00	$2,007.00	$5,452.00

Option B - $100,000 Critical Illness insurance: adequate for 85-90% of the population.

Plan	Annual Premium	EHO* Premium	Total Premium
T-10	$489.00	$2,007.00	$2,496.00
T-20	$710.00	$2,007.00	$2,717.00
T-75	$1,114.00	$2,007.00	$3,121.00
T-100	$1,423.00	$2,007.00	$3,430.00

The first option provides $1,000,000 of coverage that you can use any way you want. It also covers 25 illnesses.

On the other hand, the other two alternatives provide a lump sum of either $250,000 or $100,000 plus up to $5,000,000 to cover treatment for almost any illness (limited exclusions are outlined in the policy).

Conclusion: More affordable. Greater coverage. And the quoted premium includes a $250 deductible. The premium can be further lowered by increasing the deductible.

Superior coverage is provided for private care – either in Canada or abroad. It is superior both in the amount and the situations that are covered, and it is more likely to fit the client’s budget.

*EHO = “Executive Health Options” – for more information, contact me.

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