Why Parents Need Child Critical Illness Insurance

protecting your children from critical illness

Child Critical Illness insurance might seem like a far-out idea but think of this way. What would happen if your child became ill and you had to quit your job to take care of them? What if you wanted to but, it wasn’t financially feasible for you to take a leave of absence from work? How would you feel knowing you were not able to be there for your child in their time of need? 

No parent wants to think about their child becoming seriously ill, but the reality of the situation, critical illness can happen to any child. Consider the following scenario. According to Statistics Canada, 61.9 percent of Canada’s families coming from dual-income households.  What is the likelihood of one parent, or worse both, being able to suddenly leave their job for an extended amount of time if their child becomes sick? Would you and your spouse be able to do it? Why gamble with “what if”?

That’s why having Critical Illness protection for your children is just as important as having it for yourself. Having Critical Illness insurance for your child gives you the financial protection you need so that you can be by your child’s side when they need you most.

Here are a few other stats that might get you to rethink why critical illness insurance coverage for your child is a good idea. 

  • Between 2009 and 2013, there were 4,715 new cases of cancer in children 0–14 years of age in Canada, an average of 943 cases per year. The three types of cancer that account for the majority of new cancers in children 0 – 14 years of age are leukemia (23%), brain and central nervous system (19%) and lymphomas (11%). *Canadian Cancer Society. 
  • An estimated one in every 3,600 children born in Canada has cystic fibrosis (CF). More than 4,300 children, adolescents, and adults with CF attend specialized clinics. *Cystic Fibrosis Canada. 
  • One out of every 400 individuals in Canada is diagnosed with Cerebral Palsy. *CanChild 
  • According to Statistics from the Canadian Pediatric Society, 33,000 school-age children between 5 – 18 years of age have Type 1 Diabetes. An estimated 9 to 10% of all diabetes, including children and adults, are insulin-dependent. 

How Child Critical Illness Insurance Can Help 

Critical Illness insurance is a living benefit that pays a lump-sum benefit, following a survival period of 30 days after diagnosis of one of the many life-threatening critical illnesses. 

Depending on the insurer you purchase your policy through, coverage and what critical conditions are covered can vary. Most insurer’s Critical Illness insurance plans in Canada cover the 26 different critical illnesses updated in the 2013 Critical Illness Benchmark Definitions published by the Canadian Life and Health Insurance Association (however, this is not the maximum of conditions that can be covered). When considering a Critical Illness insurance plan for your child, look for one that covers the most common childhood critical illnesses: 

  • Cerebral palsy
  • Muscular dystrophy
  • Congenital heart disease
  • Type 1 Diabetes Mellitus 
  • Cystic fibrosis. 

Just like purchasing a life insurance policy on your child at an early age is more cost-effective with lower premiums, so is purchasing Critical Illness insurance. Critical Illness insurance coverage can start as early as 15 days old. The insurance allows you to use the lump sum benefit for whatever you need. One of the most obvious benefits is being able to take a leave from your job so that you can take care of your child. Other examples of how you might use the funds provided by a Critical Illness insurance policy include: 

  • Paying for specialized treatments or alternative therapies not covered by group or government-sponsored health plans. 
  • Covering the cost of travel and accommodations expenses if you are coming out-of-town or out-of-country for medical attention and treatment.
  • In-home nursing, support care, or respite care. 
  • The cost of the vehicle or home modifications to improve ease of living and accessibility if your child has a physical disability. 
  • Prescription medications 
  • Re-paying debt & as protection savings, eliminating the need to use your retirement savings. 

Some Things You Need to Consider

Not all Canadian insurers offer critical illness insurance plans for children, but a few insurers do. Instead of shopping around online, we recommend you consult with a Licensed Life Insurance Broker. First of all, they know the insurance market inside and out and can help you get the best coverage based on your needs and affordability. Secondly, they can also go through the different plans with you and help to decipher and clarify contractual jargon. 

Here are a few things to consider when selecting a Critical Illness insurance plan for your child (and for yourself too if don’t have coverage either).  

Policy Language 

While Critical Illness insurance plans cover a variety of critical conditions, the language in these policies is quite specific. Each ailment has a separate description which outlines the requirements for coverage. A Licensed Life Insurance Broker can help you to decipher and clarify the wording in your policy. 

Coverage Terms 

When it comes to the term of coverage for critical illness insurance plans, there are a few different options. Most coverage terms come in 10-year renewable increments, but you can also pay a little more and get a level premium up to the ages of 65, 75 or even 100. 

Return of Premium 

A return of premium rider clause (also called an add-on rider) allows an insurer to return all the premiums you’ve paid if you have no claim by the end of your term, hit certain age milestones or surrendered your policy. It will cost you more in premiums while your insurance policy is in force, but this can provide you with an added incentive to get coverage for such specialized insurance. There is also a return on premium upon death clause whereby your premiums get paid out to your beneficiary should you pass away unexpectedly and if you have not received any benefit payment from your policy. 

Partial Payouts 

Some Critical Illness plans also have what is called a partial payout clause where specified illnesses identified in your policy that are not considered life-threatening or terminal, allows for a partial payout of around 10 to 25 percent of your coverage amount. Non-life-threatening cancers usually fall under this clause. A partial payout affords you some financial protection while recovering from certain illnesses while keeping the protective aspect of your policy in place should you be diagnosed with a terminal condition down the road. 

Disclaimer: The material provided in this newsletter is for informational and/or educational purposes only. The information, opinions and/or views expressed in this newsletter are those of the authors and not necessarily those of the distributor. All financial endeavours should be vetted through a financial professional: life insurance broker, financial planner, accountant, lawyer, and/or other professional, as the reader, sees fit. MacDev Financial Group Corp., SET Financial Solutions Inc., including but not limited to its agents, staff, associates and/or partners will not assume any liability for any information printed in this article; indirectly, or assumed. The MacDev tagline, “Financial Control For Life” and “Bank On Whole Life” are trademarks of the MacDev Financial Group Corp. Click Legal for further information.