It’s always heartbreaking to read the stories behind crowdfunding campaigns to help families of sick children. Cancer, cerebral palsy, cystic fibrosis… Parents are worried, they have put their lives on hold and their financial situation is precarious. Is critical illness insurance the solution?
Posted yesterday at 6:30 a.m.
Unfortunately, it’s not true that it only happens to others. The others could be us. Parents of seriously ill children can attest to this.
And despite our universal healthcare system, a diagnosis of cancer comes with a host of costs. Parents who must be absent from work to be at the bedside of their child are no exception: lost wages, transportation, parking, meals in the canteen, work to adapt the house to the wheelchair, medication not covered by the Régie de Quebec health insurance (RAMQ). Perhaps they will also need domestic help, for cleaning, meals, looking after other children.
There is an affordable way to avoid the financial turmoil that serious illness can cause, argues Antoine Auger, financial planner at IG Wealth Management. You can insure your child against serious illnesses, an option that parents don’t often think about, or that they voluntarily rule out.
SCREENSHOT FROM GOFUNDME WEBSITE
Crowdfunding sites like GoFundMe bring together many campaigns to help families with sick children.
“A lot of people say that paying for this type of insurance is to admit that it could happen that their child is sick. As if it brought bad luck. Others think that the insurance companies are a scam”, observes Antoine Auger.
I don’t know if life insurance holders die younger, but I can understand the distrust of insurers. We’ve all heard stories of never-ending struggles to get paid. In order not to be disappointed and to have confidence, “the most important thing is to understand this type of policy”, insists Jeffrey Morrow, financial security advisor at Desjardins, while ensuring that his employer “delivers a lot of checks”. The Autorité des marchés financiers (AMF) also recommended in 2021 that insurers better explain the product, which is often misunderstood in Quebec.
What you need to know is that a predefined list of illnesses, to which injuries are sometimes added (serious burns, loss of a limb), are covered.
At Desjardins, for example, the list has 29 conditions and it is possible to add more as an option. That of Canada Life, although different, covers approximately the same number. The goal being to cast a wide net, orphan diseases are not covered. Too bad, because they also cause significant costs. As for the cancer, it must be “life-threatening”, which excludes “malignant melanoma skin cancers”, for example. Does this spec cause fights? Not really, because the contracts are detailed, I am told.
Important fact: the insurance does not cover the expenses caused by the illness. During a diagnosis, a non-taxable amount is paid all at once (with some exceptions). It can be used as parents wish.
Like life insurance, critical illness insurance can be permanent or term, a more affordable option. Thus, you can insure your child for 10, 18 or 25 years, for example: “90% of the insurance that I sell to my clients is temporary. It’s inexpensive and it does the job. ! “says Antoine Auger.
When budget is an issue, he recommends choosing a shorter duration, but a sum large enough to have a significant impact. Because the goal of the police is to reduce financial stress in a trying time.
Rather than taking out permanent insurance for a small $25,000 or $50,000, I prefer that my clients take out term insurance for a large amount.
Antoine Auger, financial planner at IG Wealth Management
“What makes the difference? I think that 1 million in a bank account allows you to cope better with your new reality than $25,000”, illustrates the financial planner.
At Desjardins, “Health priority – child” insurance is mandatory permanent. The cooperative does not offer any temporary protection.
The advantage of this type of font: it can practically be free. We pay for it for 20 years, and if it has not been used, we are reimbursed for all the premiums paid. In reality, we only deprive ourselves of the return that would have been obtained if the money had been invested.
The child who has become an adult can also choose to keep his insurance for the rest of his life. In this case, he will not be reimbursed, but he will remain covered without ever paying a penny. The policy could prove useful since dementia, Alzheimer’s disease and Parkinson’s are among the illnesses covered. The heirs will benefit from the reimbursement of premiums on death, if no claim has been made.
Before taking out permanent insurance for a child, Antoine Auger believes that you must have “maximized your RESP, RRSP and TFSA and not have any debts”. Because it makes more sense to invest the premium gap elsewhere. As always, it is important to consult an expert to assess your needs, compare policies and make calculations.
One thing is certain, in any case, the ideal is to pay your insurance without ever claiming…