Are you shopping for critical illness insurance? You have probably heard all the good reasons to get personal financial protection from health risks like cancer, heart attack, by-pass surgery and stroke. Most insurance companies offer only 3 or 4 basic types of critical illness insurance:
1) Term 10 critical illness insurance: after 10 years the premiums increase substantially and the plan may no longer be affordable. Unfortunately, 10 years is not a very long time, especially when you might have a 40 year career ahead of you where you are earning good money.
2) Term 65 or 75 critical illness insurance: this type of plan holds the premiums level to age 65 or 75 and then the plan ends. In fact I really like this kind of critical illness insurance, especially combined with a Return of Premium rider, so that if you never get sick and never need the plan you get all your money back. The down side here is that this is now becoming a very expensive option, and many people just ca not afford it.
3) Term 100 critical illness insurance: this is the “permanent” option for critical illness insurance. Combined with a return of premium at death rider (which pays all your premiums back to a beneficiary if you die without claiming your benefit) and you are guaranteed to benefit from this policy, either as a critical illness claim or a forced savings plan for your beneficiaries. This plan, however, suffers from the same problem as the Term 65/75 in that it is very expensive and out of the budget for many middle income Albertans.
Enter Term 20 Critical Illness Insurance from BMO Insurance
BMO Insurance is one of the few companies offering critical illness Term 20 coverage, and their premiums are the best in the Canadian marketplace for this type of policy. BMO Insurance offers complete coverage of ALL critical illnesses that you could possibly get, where as some other companies have a cheaper price but do not cover all the conditions you would expect from your critical illness insurance policy.
The price difference between a Term 10 and a Term 20 critical illness policy with BMO Insurance is usually only 15-30% higher depending on your age. The average renewal premium of a Term 10 critical illness insurance policy is 210-240% of the initial premium. That is more than double the cost for the next 10 years.
Cost Case Study
Aa Alberta man, aged 40 buys $100,000 Term 10 critical illness insurance and keeps the policy for 20 years until he is 60. For the first 10 years he pays $46.26 per month, totalling $5,551.20 over 10 years. The renewal premium for the next 10 years is $110.70 per month. The next 10 years costs him $13,284. That is a grand total of $18,835.20 over 20 years.
If this same man had purchased a $100,000 Term 20 critical illness insurance policy and also kept it for 20 years he would only pay $66.96 per month. This would total $16,070.40 over 20 years. There is an immediate cost savings of $2,764.80 for exactly the same coverage for the same length of time.
Your coverage during peak earning years
The best time to be covered for a critical illness is during your working years. When you are earning an income, especially into your peak earning years from about age 40 to 60, you stand to lose a huge amount of financial wealth if you are struck down with a critical illness. Not only would you lose income from being away from work for 2 or 3 years, you might not be able to go back into the same kind of job (maybe a high paid, high stress job caused your heart attack?). If you had to liquidate your RRSPs during these peak earning years to access cash for health and lifestyle needs, your retirement portfolio will never recover.
A 10 year term critical illness insurance policy is not long enough for anyone. You will definitely see at least one hefty renewal. A term 20 critical illness plan can cover you for the majority of your peak earning years, and it is far cheaper in the long-run that a term 10 plan held over 20 years.
Consider Term 20 Critical Illness Insurance from BMO Insurance
If you are in the market for critical illness insurance and are on a budget, you will need to look at a term 10 or term 20 plan. Try thinking a little longer term than the next 10 years. Will you still need this coverage in 15 or 18 years? If so, get the Term 20 plan now. Lock in your price for a reasonably long period of time and do not worry about it anymore. You should be able to still buy a large amount of coverage to protect your risks and stay within your monthly budget for health insurance protection.
President, Life Guard Insurance
Mitch Reynolds has been a licensed life insurance agent and manager since 2000. He has worked across Canada as an agent and manager for major financial institutions. With +10 years of industry experience, he knows how to structure insurance solutions for any type of need. Contact Mitch directly, please click here.