Group critical illness insurance benefits (CI) are considered a limited form of health insurance. An insurer agrees to pay a lump sum payment if the policyholder is diagnosed with and survives a life-threatening condition such as cancer, heart attack or stroke. Typically, the insured must survive a specified number of days from when the illness was first diagnosed. Not all plans and options are the same, some are basic covering four to six illnesses and others are enhanced by covering over twenty illnesses. The odds of a critical illness happening are very high and can unfortunately happened to anyone, at any age.
Unlike long-term disability (LTD) or life insurance, you can still receive your Critical Illness benefits (CI) benefit without having to die or be unable to work due to a disability. This is important to consider as a critical illness may not result in death or a disability. People today are living longer with critical illnesses and the financial burden can be devastating to both the individual and their family.
Group critical illness benefit levels are typically lower than what can be purchased in the individual market, none the less the coverage will provide piece of mind for employees. Typical levels of coverage are:
Higher amounts may be available as well.
Non-Evidence Maximum (NEM):
Non-evidence maximums (NEM) are similar to life insurance where the insurer may offer a certain level of coverage without the need to submit evidence of good health. If the benefit available exceeds the non-evidence level, the employee will need to apply for the excess coverage by submitting evidence of good health to the insurer. Some plans simply provide a guaranteed and set level to all employees based on the size of group.
Plans will vary from insurer to insurer and group to group. Below is an example of some illness commonly found in a basic and enhanced policy:
- Heart attack
- Kidney failure
- Coronary artery bypass surgery
- Major organ transplant
- Multiple sclerosis
- Loss of independent existence
- Loss of speech
- Benign brain tumor
- Major burns
- Major organ failure (requiring transplant)
- Aortic surgery
- Alzheimer’s disease
- Parkinson’s disease
- Aplastic Anemia
- Bacterial Meningitis
- Heart Valve Replacement
- Loss of Limbs
- Motor Neuron Disease
- Occupational HIV
Coverage typically terminates from age 65 to age 75, on death, termination of employment or the policy. Some plans may allow an employee to convert their coverage within a specified time frame of leaving their employment and group benefits plan.
Another option offered by some insurers is optional CI, where the employee has the option of purchasing set amounts individually on their own through the insurer which may or may not require a medical.
Pre-Existing Condition Limitation:
Virtually all insurers include a pre-existing condition limitation. Most plans exclude coverage during the first 24 months for any condition diagnosed or for which the applicant received medical treatment during the two years prior to the commencement of insurance. Under this limitation, covered conditions are excluded from coverage when all the following are true:
- The insured had a pre-existing condition during the 24 month immediately prior to the coverage
- The critical illness is related to a pre-existing condition
- The critical illness is diagnosed within the first 24 months after the coverage is in effect
Some insurers may have further exclusions, alternate definitions and/or variations on the above examples.
Critical illness benefits are extremely important as they can provide cash at a time when people typically need it the most. If one is diagnosed with a critical illness and survives, there could be extra bills to pay, such as parking at a hospital; drugs and medical expenses not covered by a group benefits plan or the government; supplementing spouses lost income if they need to leave their job to help with care; hiring a nurse, childcare or nanny; seeking treatment not available in Canada; modifications to a vehicle or home; preservation of retirement funds; credit card bills and list goes on. The benefit payout is spent however the insured sees fit.