ARTICLES  &  REVIEWS

Living Longer with a Critical Illness

London Free Press

 

At the beginning of the century a 20 year-old man could expect to live to the ripe old age of 62 on average, a 20 year-old woman to 63 years old on average. But with advances in medical science, the Society of Actuaries now tells us a man who turns 20 in the year 2003 should plan to live to be around 74, an a woman to age 81.

 

In fact, as we live longer the probability of having a critical illness and surviving increases dramatically. Dr. Christian Barnard, the famous heart transplant surgeon from South Africa, witnessed financial disaster in the lives of people he saved through transplant surgery. He was so moved and impacted by the financial catastrophes that he witnessed as people lived in a disabled state, he helped to pioneer and promote "critical illness" insurance. This kind of coverage is very common in South Africa, Australia and the United Kingdom. Since it is newer to Canada, it is worth examining.

 

Critical illness insurance pays a lump sum on the diagnosis of certain well-defined conditions or illnesses. If you suffer a heart attack, stroke or cancer, for example, and you survive 30 days following the diagnosis or surgery, you could receive a lump sum of one, two or three hundred thousand dollars even in the event of a full recovery. Critical illness insurance is not designed to replace or diminish the need for long-term disability insurance, but it does give you a lump sum dollar amount paid up front in cash to help you ease any financial burdens incurred through your condition.

 

The lump sum payment could be used to pay off debts or spend less time working and more time getting better. It also allows you to spend money on treatment that may be required a as result of your initial critical illness and to improve your living conditions. There is no means test for critical illness like there is for a long-term disability, which usually requires on-going medical treatment and proof of a continued disability.

 

One in three people will develop some life-threatening cancer, one in four will contract heart disease before they retire and one in twenty risk the chance of having a stroke before age 70. With each medical breakthrough, more people survive but live in a disabled state. For cancer patients, it is common to live in remission for many years. For many people, a heart attack is a warning sign to take life a little easier. The critical illness policy can bridge the gap created by the change in lifestyle the illness causes. When a critical illness strikes, there is generally a need for an immediate and urgent cash infusion to cover many one-time expenses. Many critical illness victims do make a full recovery, but for most patients the recovery is lengthy and expensive.

 

In the event of a critical illness such as the following, the whole amount of benefit would be paid to you in one tax-free lump sum:

 

Alzheimer's disease Major Surgery Blindness Cancer Coma Bypass Deafness Heart Attack

Kidney Failure Loss of Speech Major Burns Major Organ Transplant Multiple Sclerosis Paralysis Parkinson's Disease Valve Replacement

 

The complete definitions of these conditions appear in the policy contract.

Since inception, the critical illness plans have become more sophisticated.

A refund of premium option allows for all of your deposits to be refunded in 10 years from your date of issue if you have experienced no claims. Critical Illness fills a missing need in most people's financial security portfolio.