Q&A: Disability Versus Critical Illness Insurance

Peter Muggeridge looks at the key differences between these two insurance products.

Q. If I already have disability insurance, do I also get critical illness insurance?

A. Obviously, the more coverage you have, the better. However, there are key differences between these two insurance products that should help shape your decision. A disability insurance plan only makes sense if you’re employed (which is often covered through workplace benefits programs).This plan helps cover expenses if, through injury or illness, you’re not able to work.

Critical illness insurance, on the other hand, is a product designed to provide a financial cushion while you recover from a dangerous diagnosis. Though the list of covered illnesses will vary by carrier, most will cover heart attack, stroke and coronary artery bypass surgery. Other illnesses typically covered include Parkinson’s and Alzheimer’s disease, blindness, deafness, paralysis, kidney failure and severe burns. Benefits are paid when you’ve been diagnosed by a doctor, and you survive a 30-day period following diagnosis.

The interesting thing about this product is that you can use the payout for anything you desire, without providing receipts. Book a long vacation in the sun, buy a high-def TV, renovate the house or use it to pursue out-of-country alternative therapies. It’s entirely your call on how the payout gets spent.