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The Importance of Critical Illness Insurance for Homeowners in Canada


When you buy a home, you’re usually thinking about paint colours and floor plans. If the home is older, you might be thinking about changing the tiles and regrouting the bathroom. But, you’re probably not thinking about how to pay for the mortgage or maintain the home if you have a diagnosis of a life-altering illness. However, a house is more than a home; it’s a financial commitment that relies entirely on your ability to earn and maintain an income. This is why I recommend that most Canadians should consider a critical illness insurance policy.


While Canada’s publicly funded healthcare is a point of pride, it doesn’t pay your mortgage or your out-of-pocket medical bills; and the effects of those costs, called "financial toxicity", can hit families when they least expect it. 


A national study, sponsored by the Canadian Cancer Society, found that 33% of people with cancer reported the financial strain from out-of-pocket costs to be high. This should not be surprising because even with provincial coverage, individual Canadians are still responsible for take-home mediations, travel and accommodation and home modifications. It might not seem like a health care cost, but most cancer patients have extra travel and accommodations costs. Some are small (like public transportation, parking in hospital lots, taxi and Uber trips); while others, like hotel rooms or airplane trips, might be more costly. All of these costs, though, pile up and that can lead to thousands of extra unforeseen dollars. Dollars most people do not have.


After that there is the problem of recovery. A major study by the Canadian Partnership Against Cancer found that 4 in 10 survivors reported practical challenges after their treatment ended. From returning to work to getting life insurance, recovery is sometimes the hardest part of a cancer diagnosis.


This is why I often recommend that homeowners purchase a critical illness insurance policy . Unlike life insurance (which is valuable in death) or disability insurance (which provides monthly income), a Critical Illness policy pays out a tax-free, lump-sum benefit directly to you. A tax-free, lump-sum benefit that can be as small as $25,000 or as large as $2,000,000; a choice that you can make. 


Even more importantly, you can use it for whatever you need to. So, if you need the tax-free, lump-sum benefit to reduce your debt, you can do that. If you need the tax-free, lump-sum benefit to pay for medical bills, you can use it for that. If you need the tax-free, lump-sum, to pay for a Licensed Practical Nurses (LPNs), a Personal Care Aide/Assistant (PCA), personal chef, housekeeper or dogwalker to help you through your recovery, all of that can be paid for using the tax-free, lump-sum benefit. The benefit is just the start.


However, it is important that you do start. At least, start to have a conversation as to whether you have a plan that can be implemented if a diagnosis ever comes your way.


After all, a critical illness diagnosis shouldn't mean a "For Sale" sign on your front lawn. By having a portal critical illness policy alongside your mortgage, you ensure that you have a plan. Meaning that if you ever face the challenge of a cancer diagnosis, your focus remains on healing, and not on how you’ll afford next month’s payment.
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