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Do I need Critical Illness Insurance as a Self-Employed Person?


While some health problems can be chronic and keep us out of work for years, some illnesses can be sudden and life-threatening. These types of critical illnesses can leave us facing financial hardship unexpectedly. Critical illnesses are more common than you might think. 

The risks of developing a critical illness are high:

  • There are an estimated 70,000 heart attacks in Canada each year.

  • 40% of Canadian women and 45% of Canadian men will develop cancer.

  • Around 400,000 Canadians are living with the effects of stroke. 

What is critical illness insurance?

Critical illness insurance was designed by doctors. Dr. Marius Barnard, a cardiac surgeon from South Africa, often saw his patients struggle financially while they recovered from a critical illness. He convinced insurance companies to develop a new type of insurance policy that would relieve the financial burden of being unable to work due to life-threatening illnesses. 

Critical illness insurance policies can be individually owned where an individual is a beneficiary, or owned by businesses where the business is the beneficiary. As a self-employed person, you’ll want to find an individual policy where you can be the beneficiary. If you develop a critical illness that your policy covers and then make a claim, the insurance company will pay you a tax-free lump sum. 

You can use this cash lump sum to pay for:

  • Rent

  • Bills

  • Hiring people to help you at home e.g. a cleaner

  • Medical expenses not covered by your provincial plan

  • Any other living expenses

What to look for in critical illness coverage

When shopping for critical illness insurance there are two things to look for. The first is what illnesses are covered by the policy and the second is whether a return of premium option is included. 

  1. Illnesses covered by the policy

There are five most common critical illnesses that insurance policies will cover. These are:

  1. Heart attack

  2. Stroke

  3. Life-threatening Cancer

  4. Coronary bypass surgery

  5. Aortic surgery

If you would like to be covered for more, then it’s best to shop around as some policies will cover more illnesses. Bear in mind that a policy that covers more illnesses will incur higher costs. 

Return of Premiums

Some insurance policies give you the option to have your premiums returned if you do not make a claim by the end of the contract. This makes critical illness insurance a win-win. You either get the lump sum when you need it, or you get your money back. Including a return of premium option in your policy will also incur higher costs. 

Do you need critical illness insurance?

If you and your family heavily depend on your income, and you don’t have enough savings to cover living expenses while you recover, then critical illness insurance is a must-have. You might not need insurance at all or only need a low amount of coverage if you have a partner who can help pay for expenses such as rent, mortgage payments and everyday bills.

Get a quote

Critical illnesses can be sudden and unexpected so it’s important to protect yourself financially. Bounc3 can help you find the most affordable and suitable critical illness policy for your individual needs.