Critical Illness Insurance
After being appointed as broker of record for a company of 250 employees, we decided to focus on the benefits provided for their executives which included 10 people.
After review, we discovered that there was reverse discrimination occurring on their Long Term Disability (executives and their incomes were only covered for 40% of their income compared to the 70% most employees were covered for their incomes).
Strum Insurance recommended a top-up of their LTD benefit, which eliminated the discrimination.
At the same time we introduced Critical Illness as another benefit to provide for the executives. This benefit would pay out a lump sum tax-free amount should one of the executives be diagnosed with one of the 24 covered conditions ( Heart Attack, Stroke, Heart By-Pass surgery, and Cancer being the four conditions that make up the majority of claims).
With Long Term Disability only replacing a portion of their income (usually around 70%), the financial effects of a Critical Illness would be damaging as they are already experiencing a reduction in income. Also, a Critical Illness such as Cancer can be quite costly given that a lot of the treatments and drugs associated with these treatments are not covered by the provincial drug plan.
- If there was any kind of waiting period for treatment they would have the option of using the tax free benefit as a means to acquire quicker and sometimes more advanced treatment outside the province.
- It would allow the executive to focus on getting back to health and not allowing the financial stress to further complicate matters.
- These plans were also portable so that if the executive leaves the company he would be able to take the plan with him.
- As it turned out, one of the executives suffered a brain aneurysm and qualified for a $250,000 tax free pay-out which helped his family to financially cope with the traumatic circumstances of his illness.
- As the company was paying the premiums on this program we did not include a Return of Premium Rider, but individuals have the option to add this rider so that if they remain healthy they are eligible to receive a full refund of premiums paid (100%) at a future date (usually 15 years or longer).