Coverage Tips

Critical Illness Benefit (Benefit Tips ® - © 1992)

Canadians are concerned with the future of the health care system. They worry that more of the health care cost will shift to the disabled and their families. Critical illness insurance provides a hassle free way to provide liquidity to meet the financial needs during a medical crisis.

Why is Critical Illness Insurance Necessary?

  • disability insurance replaces income but is insufficient for the added burden of medical expenses
  • group health coverage has restrictive limitation and maximums
  • social medical care is eroding and cannot be relied on
  • personal and retirement savings have intended purposes other than medical expenses
  • long term care insurance is too restrictive and inflexible
  • most critical illness victims make a full recovery after a lengthy expensive treatment period

Canadian Statistics

  • 1 in 2 will contract heart disease
  • 1 in 2 heart attack victims are under age 65
  • 1 in 3 will develop some form of life threatening cancer
  • 1 in 4 currently suffer from cardiovascular disease
  • 70% of open heart surgery operations each year are coronary bypasses
  • 1 in 4 will suffer kidney failure
  • 1 in 20 run the risk of having a stroke before age 70
  • 1 in 500 people will suffer from multiple sclerosis
  • heart attack, cancer and stroke are the 3 most common diseases of the 90s
  • 1 in 4 will contract cancer or heart disease before they retire
  • 2/3 of the cost of cancer treatment is not covered by provincial medical plans
  • 30% of cancer victims are completely cured
  • 75% of stroke victims survive the initial occurrence
  • 95% of heart attack victims survive the initial occurrence

Quality of Disability Insurance (Benefit Tips ® - © 2002)

Long-term disability insurance is the most important employee benefit. The risk of occurrence is high and the financial impact devastating. Twenty-five percent of your workforce will be disabled for at least six months during their career. Without adequate coverage they are left to rely on social assistance.

I was involved with dozens of disability claims during the past twenty years. Each one was settled fairly except for Cathy’s claim.

I met Cathy a decade ago. She worked her way up to vice-president of a Toronto consulting firm. She loved her work, got along with everyone and had outstanding performance reviews. Three years ago she became ill and after a year of juggling her work and recovery she finally gave up her job.

Cathy expected to receive disability benefits until she got better. After all, she paid long-term disability insurance premiums for over a decade. But the insurance company decided that Cathy was not disabled.

When I talk to Cathy I sense her indignation. She expected her claim to be approved. Cathy lost her health, her job, her co-workers, her income and now her dignity was at stake.

To understand how this can happen we need to look at weaknesses in Cathy’s insurance contract.

Cathy’s contract states that she will be considered disabled if she is deemed so by the insurance company. A better contract would outline the criteria without positioning the insurance company as the sole decision maker.

Cathy was seeking the best treatment from the best specialist. No one thought she was faking it except the insurance company. They declined her claim and appeal by deeming her not disabled. (I’m sure she wished her doctor could do that!)

Another weakness in Cathy’s contract is that her partial disability benefit only paid while she qualified as totally disabled but worked on a part-time basis. A better contract would define partial disability as something other than total disability. The following definition of partial disability has been available for twenty years: “The insured, while unable to perform all of the material duties of his/her regular occupation on a full-time basis, is performing at least one of the material duties of his/her regular occupation on a part-time or full-time basis and earning currently at least 20% less per month than his/her indexed pre-disability earnings.”

Total disability only covers part of the risk. Cathy’s disability was progressive and if her contract had a proper partial disability benefit she would have been able to claim sooner. Furthermore, most disabilities don’t miraculously disappear; they involve a gradual recovery over many months or years.

Insurance is a contract that you arrange when you are healthy. Please review yours today and make sure it is the best coverage that your organization qualifies for.