Group Critical Illness Coverage

Canadians are concerned with the future of the health care system. They worry that more of the health care cost will shift to the disabled and their families. Critical illness insurance provides a hassle-free way to provide liquidity to meet the financial needs during a medical crises.

Why is Critical Illness Insurance Necessary?

  • disability insurance replaces income but could be insufficient for the added burden of medical expenses
  • group health coverage has restrictive limitations and maximums
  • public medical care is eroding and can not be relied on in all situations
  • personal and retirement savings have intended purposes other than medical expenses
  • long term care insurance can be restrictive and inflexible
  • most critical illness victims make a full recovery after a lengthy, expensive treatment period

Group Critical Illness Coverage

As insurers are gaining experience with this new product, they are broadening the definitions and reducing prices. The first Canadian plans covered less than 10 events, and now cover 16 events. Critical Illness insurers in the United Kingdom now cover 27 events and insurers in Malaysia cover 36 events. We can expect a few new events to be added annually. A group policy can be improved annually to attract new participants and retain existing members. If you buy individual coverage, the only way to benefit from product improvements is to apply for a new policy every time a coverage enhancement becomes available.

Group plans are designed to allow members to purchase (not be sold) coverage in a manner that reduces the distribution costs (commissions) and administration (premium collection) costs. Ideally, members would be able to continue their coverage on a direct billing basis even after they no longer belong to the group.

How Critical Illness Insurance Works

  • select an amount of coverage from $50,000 to $300,000
  • provide medical evidence of good health above the non-evidence maximum (amount provided without any health questions)
  • authorize payroll deductions for as long as you want the coverage
  • claim the full amount of insurance if you survive a covered event by 30 days (paralysis has a 90 day assessment period in the event of an accident, otherwise paralysis has a 180 day assessment period; paralysis resulting from intentional self-inflicted injuries is excluded)
  • convert to an individual policy when you leave the group

What To Look For In Critical Illness Coverage

  • clear definitions (medical terminology)
  • no restrictions at time of claim
  • comprehensive scope of coverage
  • short elimination period (30 days)
  • lump sum benefit payment
  • liberal underwriting


  • claim payments are received tax-free
  • employee contributions are not tax-deductible
  • employer contributions are taxable income to employees
  • in some provinces, provincial sales tax (PST) must be paid on premiums