A recent annual report published by the Canadian Cancer Society paints a grim picture regarding the future diagnosis of cancer in Canada; indicating that at a staggering 50% of Canadians will be diagnosed with cancer in their lifetime.
The report, as gloomy as it was in details, is an indication of the tsunami of financial problems Canadians will be faced with if proper risk management strategies are not implemented to offset the future costs; for example, purchasing critical illness insurance.
Cancer is one of the “big four” illnesses usually claimed under critical illness insurance policies, along with Heart Attack, Alzheimer’s Disease and Stroke. Despite that fact, many Canadians still do not own a critical illness insurance policy.
For that to change, four things must be clearly understood:
1. It’s the cost of surviving a critical illness that will impact the entire family.
I recently experienced a client going through a “downstyling” phase as she recovered from a critical illness. Downstyling, is a phase I coined to describe the involuntary changes to a person’s lifestyle brought on by financial hardship. The client lost the family home, depleted her retirement savings, and drastically reduced the lifestyle and the level of comfort she and her family were accustomed to. Though the economic costs of a critical illness can be quantified, the emotional costs to the client and her family cannot.
2. The government will not take care of you.
Provincial health plans cover only your basic health care needs. They do not provide coverage for the increase in day-to-day living expenses due to your illness. The misconception that the government will cover the cost when someone is diagnosed with a critical illness has contributed to the prevailing attitude that critical illness insurance coverage isn’t necessary. In reality, the government won’t pay for the extra costs associated with your treatment, specialized care received at private facilities, time off for love ones to provide care, hospital parking, gas, and other miscellaneous costs incurred. These costs can quickly add up, creating a mountain of debt and making recovering from a critical illness even more challenging.
3. Disability insurance benefits are not a substitute for critical illness related costs.
The general thinking that having disability insurance is sufficient and will help pay for the unexpected expenses that result from a critical illness diagnosis, is misleading. Monthly expenses will not take a holiday if you are diagnosed with a critical illness; they will continue. Disability insurance provides a monthly income benefit if you can no longer perform the normal duties of your work. The benefits are typically used to cover your regular expenses. Critical Illness expenses are additional costs that are not accounted for when deciding how much disability insurance coverage one is eligible for.
4. It’s cheaper to plan for unexpected expenses by transferring the cost of the uncertainty.
Canadians purchase fire insurance on their home because they don’t want to incur the cost of rebuilding a home destroyed by fire. The purchasing of fire insurance is planning for an unexpected event by transferring the cost to another. As mentioned previously, there are significant costs that result from surviving a critical illness. These costs are not covered by the government, and disability insurance benefits are insufficient to cover critical illness related expenses. The prudent thing to do is obtain critical illness insurance as an effective means of transferring these costs; and better yet, if there are no claims the premiums may possibly be fully refunded.
It Won’t Happen to Me
In my conversations with clients about critical illness insurance, the general attitude is “it won’t happen to me, I’m healthy”.
However, the stats prove otherwise:
50% of Canadians will be diagnosed with cancer in their lifetime. (Canadian Cancer Society)
1 in 5 Canadians will develop heart failure in their lives. (Heart & Stroke Foundation)
9 in 10 Canadians have at least one risk factor for heart disease or stroke. (Public Health Agency of Canada)
1 in 20 Canadians over age 65 and 1 in 4 of those over age 85 have Alzheimer’s disease. (Alzheimer Society Canada)
Start Planning Now
It’s difficult to imagine being diagnosed with a life-threatening illness. Consequently, Canadians usually do not think about the financial impact that results from a critical illness diagnosis.
As unwelcoming as the thought may be, it is far worse to start planning after being diagnosed with a critical illness. Recovering from a critical illness presents significant challenges to one’s health and well-being; and the process need not be compounded by also needing to worry about the cost of recovering.