← All coverage

Critical illness insurance

Critical illness insurance pays you a lump sum, generally tax-free, if you are diagnosed with a serious illness named in your policy, such as cancer, heart attack or stroke, and you meet the policy’s conditions.

It is paid to you while you are alive, to use however you need.

How it works

The policy lists the illnesses it covers and defines each one precisely. If you are diagnosed with one of them and meet the definition, you usually need to survive a waiting period after diagnosis, commonly 30 days, before the benefit is paid.

The money is yours. People use it for time away from work, treatment or costs that public health care does not cover, travel for care, help at home, or to keep up with the mortgage and bills.

Most policies pay once and then end. Some offer options, such as getting some or all of your premiums back if you never claim. These cost more, so it is worth asking how much.

The policy lists the illnesses it covers and defines each one precisely. If you are diagnosed with one of them and meet the definition, you usually need to survive a waiting period after diagnosis, commonly 30 days, before the benefit is paid.

The money is yours. People use it for time away from work, treatment or costs that public health care does not cover, travel for care, help at home, or to keep up with the mortgage and bills.

Most policies pay once and then end. Some offer options, such as getting some or all of your premiums back if you never claim. These cost more, so it is worth asking how much.

For illustration only: someone in their forties with a mortgage and a family might choose critical illness cover so that, if a serious diagnosis meant months away from work, the household bills could still be paid without drawing on savings or retirement funds.

Keep in mind

• Only the illnesses named in the policy are covered, and each has a specific definition. For example, some types or stages of a condition may not qualify.
• There is usually a waiting period after diagnosis before the benefit is paid.
• Pre-existing conditions and exclusions can apply.
• Premiums are usually higher than term life for the same amount of cover.
• It does not replace life insurance, and it is not the same as disability insurance.

Common questions

Is critical illness the same as disability insurance?

No. Critical illness pays a lump sum when you are diagnosed with a covered condition. Disability insurance replaces part of your income, paid monthly, if you cannot work because of illness or injury. They solve different problems, and some people have both.

What if I am diagnosed with something that is not on the list?

It will not be covered, which is why reading the list and the definitions matters. I will walk you through what is covered and what is not before you decide.

Do I still need life insurance?

They do different jobs. Critical illness helps you while you are alive. Life insurance helps your family if you pass away. Many people compare the two to decide what to prioritise.

Is the payout taxable?

Critical illness benefits are generally tax-free in Canada, but check tax questions with an accountant.

Also see: Term life insurance · Whole life insurance · Universal life insurance

This page is general information, not personal advice or an offer of coverage. Costs, eligibility and policy terms vary by insurer and by your health and situation. See my licensing and disclosure page.