Insurance Planning

Critical Illness

Critical Illness Insurance is generally available to those between the ages of 18 and 65 although some polices accept applicants and pay out to age 75. The benefit is paid out as a lump sum and is tax free. The insured may use the benefit in any way he sees fit. The benefits range from $10,000 to $1,000,000 depending on the policy and the amount of coverage that the insured requires.

Critical Care policies generally cover the following conditions:




    Heart Attack

    Kidney Failure

    Major Organ Transplants

    Multiple Sclerosis



Other conditions may be covered by a particular insurer. Policies that are more comprehensive cover Alzheimer's, Parkinson's disease, and severe burns.

Most policies exclude injuries that are incurred while the insured is under the influence of alcohol or illegal substances, and operating a machine or vehicle of any kind.

Depending on the insurer, the premiums will be based on the following factor:

    the age of the applicant

    the amount of coverage required


    smoking status

Critical Illness Insurance benefits are tax-free. The premiums however, are not deductible or eligible for income tax purposes. If the policy is owned by a business, the proceeds are tax-free if the corporation does not deduct any portion of the premiums as a business expense.

Although Critical Illness Insurance is an important piece to your overall risk management strategy, it should never be implemented in place of disability insurance. A disability plan should start with sufficient long-term income replacement insurance that will protect the insured from an extensive absence from work. Of equal importance is adequate life insurance. Following the implementation of these pieces, Critical Illness Insurance may be added as it offers an opportunity for the insured to receive additional support during a difficult time. 

The information contained in this commentary is designed to provide you with general information only, and is not intended to be comprehensive advice applicable to the circumstances of any individual. We strongly urge you to seek professional assistance before acting upon information included herein.

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