While life insurance pays your beneficiaries a sum of money if you pass away, critical illness insurance pays out when you are diagnosed with one of the major illnesses named in the policy. Death is not a requirement for the benefit to be paid, which is why it is called a “living benefit.”
Some critical illness insurance policies cover three or four conditions, but others cover about 30. The conditions covered vary among carriers and policies. Some of the conditions that critical illness insurance typically cover can include, but are not limited to: stroke, cancer, severe burns, heart attack, major organ failure, Alzheimer’s disease, aortic surgery, loss of limbs, aplastic anemia, bacterial meningitis, benign brain tumour, blindness, coma, coronary artery bypass surgery, paralysis, deafness, heart valve replacement, loss of speech, kidney failure, motor neuron disease, loss of independent existence, major organ transplant, MS, occupational HIV infection, and Parkinson’s disease.
Here are some ways you can save money on a critical illness insurance premium:
- Choose a policy that is the best for your risk factors: In most cases, the more conditions covered, the more expensive the policy. If cancer is a risk factor due to family health history, for example, you may be better served with a policy that covers cancer, heart attack, and stroke than a policy that covers 15 or more illnesses, most of which may be low risk for you.
- Some policies will exclude certain conditions, such as loss of eyesight. Weigh the pros and cons carefully of exclusions, but recognize that the lower the risk you present to an underwriter, the lower your premium.
- Did you know that insurers round your age up or down depending on when you apply for a policy? If your birthday is close to the end of the year, buy your policy in the first six months of the year to take advantage of age rounding.
- Some policies have extra benefits and riders, such as a waiver of premium rider or a child illness rider. Go without riders that do not apply to you so you can save money on the premium.
- Do you have mortgage insurance that includes critical illness insurance? Speak with a broker to see if dropping your mortgage insurance makes sense for you. You may have adequate coverage for the mortgage risk if you also have individual policies and policies through work. If there is enough overlap, you can streamline your polices so you can pay less but still have the coverage you need. Caution! Never cancel an insurance policy before learning if you have the right coverage active first.
- It costs your insurer time and money to process monthly payments. They reward you with lower premiums if you can make an annual lump sum payment.
- You can pay to have some policies backdated, giving you a chance to lock into a more advantageous rate and age bracket. Doing this will cost you more upfront, but it can save you money in the long run, especially if you have a long-term policy.
- Choose between term and permanent insurance. Permanent is more expensive at first, but it is very affordable if you buy it when you are young and in good health. Term insurance renews at a higher rate every year. If you are looking for long-term protection, choose wisely. You don’t want your term policy to end at an age when renewing will be too expensive.
- Your employer’s benefit package may include critical illness insurance. If the amount of coverage provided by your employer makes sense for you, that’s great! You have the coverage you need.
- You can get a simplified or guaranteed issue critical illness policy that allows you to skip the medical exam, but you pay more for that privilege. A fully underwritten policy that includes a medical exam is cheaper. If you are in good health, skip the no medical policy and make time for a doctor’s or nurse’s visit.
- Bundle up! If you are in the market for several different types of policies, such as disability and life insurance in addition to critical illness insurance, your insurer may have a bundle discount. Don’t be shy about asking if this is the case.
- Want a money back guarantee? Some policies come with, or allow you to purchase, a return of premium rider that pays back a full or partial refund of your unused premiums. There is often a charge for this, but the extra money can more than offset a return of premium years down the road.
- Consider getting a life insurance policy that has an advancement of funds for a critical illness. This can be cheaper than purchasing two separate policies, but understand that an advancement affects your life insurance benefit.
- Smokers always pay more–sometimes double the rates of non-smokers. This is just one more good reason to give up the bad habit!
- Speak with a broker. Unlike an agent that works for just one company, or a bank that only sells their brand of policies, brokers have access to all the products on the market, and they will compare them for you. Brokers are like matchmakers. They check out all your options and pair you with the best one for your needs. Some brokers even get discounts that are not available to the public, so they can get you the best rate.
Age is a driving factor in the development of critical illnesses, and nobody can escape the aging process. That’s why critical illness insurance is just as important as life insurance. We hope these tips motivate you to speak with a broker and save money on this type of policy. Get in touch with a broker today and get the protection you need.