Group critical illness insurance can be viewed as a combination of group benefits and critical illness policies. This type of benefit is seen as an excellent complement to Group life schemes and can provide a very attractive solution for employees.
Critical illness insurance was first developed by Dr. Marius Barnard in 1983 as an effort to offset the financial burden associated with developing a critical illness. Recent medical advances have created an increased need for critical illness insurance; more and more individuals are surviving life altering illnesses, such as cancer, stroke or heart attack. But these advances in modern medicine have come at a cost – the increased survival rate has strained the Canadian health care system. This, coupled with the fact that many people are naturally seeking extra services and non-traditional forms of treatment, has led to a dramatic rise in cost of care and thus increasing the need for additional coverage.
As mentioned above, cost of care in many instances can be prohibitive and exceeds what is available in traditional group claims. That’s where critical illness insurance comes in – it pays out a lump sum tax free payment upon diagnosis of a critical illness. The money can be used for any purposes - to cover experimental treatment, provide daily living assistance or depending on the size of the policy seek treatment out of country just to list a few examples.
While the understanding the need for critical illness is easy, it can get extraordinaly difficult to obtain the coverage. Individual applications for critical illness coverage are much more closely scrutinized than life insurance applications. This is self-explanatory - an average Canadian is much more likely to face a critical illness than death before the age of 75. Therefore, the insurance company closely examines the insured’s health history and their family health history. Many individuals may have problems qualifying for coverage based on their age or their previous medical history may preclude or restrict coverage. On the other hand, group critical illness coverage is guaranteed and can provided at a discounted premium – in many instances the savings can be as much as 30 percent below that of an individual policy.
As a bonus, some group critical illness plans offer portable coverage. This feature alone is one of the highlights of these policy types. It allows employees who leave their employers to continue their coverage – and retain their group discounted premium.
The amount of coverage a person may qualify for depends two main factors: the insurance carrier and the size of the group. From an employers standpoint this can be a major lever in attracting and keeping key employees. Critical illness coverage bridges the gap found in most traditional employee benefit plans. An example may be a senior executive whose family health history may have precluded him from individual critical illness coverage and his group disability plan only covers a fraction of his income. A group critical illness plan may provide the leverage needed to lure him from another company or to keep him with his present employer.
A key advantage to the employee is the potential portability of the coverage. An employee retiring at 60 would be faced extortionate premiums on an individual critical illness policy and the coverage may not even be available due to health issues. However, if the same employee was enrolled in a group critical illness plan the coverage may be portable and the rates would be based on the employee’s age at the time of enrollment.
Lorne S. Marr has been a very accomplished financial planner since 1993 and runs his own Toronto life insurance company LSM Insurance Services Ltd. He's recognized as an industry leader thanks to the commitment to providing clients with value-added services. Find out more about group critical illness insurance on his website www.lsminsurance.ca.
About the AuthorTags: extra services, heart attack, financial burden, modern medicine, survival rate, critical illness insurance, dramatic rise, health care system