LIfe insurance is intended to provide financial means to those that are dependent on your income. A person should have enough insurance to cover costs such as mortgage, lost income, and savings for college/trade school tuition.

Life insurance, thankfully, is very straight forward. When the insured person dies, a claim is made and payment goes to the beneficiaries. As long as you pay your premiums, your policy is in force.

Over 99% of life insurance claims are paid out. The only times they do not pay is if the insured person omits or intentionally withholds information on an application, or in the event of suicide in the first two years the policy is in force.

A quick rule of thumb to estimate your life insurance needs is 10x your annual earnings. A life insurance calculator can factor your income and planned retirement age, remaining mortgage, lines of credit and other debts, as well as education planning for your kids.

If you have a group life insurance policy that is offered or paid for by your employer, this likely will not stay with you when you leave your job. This is because the policy is owned by your employer. Typically, group coverage is a small portion of how much you need. An individually owned policy will supplement your work coverage, and will stay with you if you leave your job.

Most insurance providers specify 25 to 30 conditions that are covered. Conditions listed will typically include: aortic surgery, aplastic anemia, bacterial meningitis, benign brain tumour, blindness, cancer (life-threatening), coma, coronary artery bypass surgery, deafness, dementia (including Alzheimer’s Disease), heart attack, heart valve replacement or repair, kidney failure, loss of independent existence, loss of limbs, loss of speech, major organ failure on waiting list, motor neuron disease, multiple sclerosis, occupational HIV infection, paralysis, Parkinson’s Disease and specified atypical parkinsonian disorders, severe burns, stroke.

It is possible to take a policy that insures for the top conditions only, which covers about 80-90% of claims. This option costs less and can help fit this type of insurance coverage within your budget.

Critical illness insurance is a form of protection that provides immediate funds to you up on diagnosis of a condition such as cancer, heart attack or stroke.  It is a tax-free, lump sum payment with no restrictions on how you spend the money.

If you purchase your own critical illness insurance, a claim is then paid directly to you as a tax-free, lump sum. You can choose how to spend that money, including paying it towards your mortgage, if you wish. Or not, that’s also your choice.

It is important to note that mortgage insurance held through your lender may include some form of critical illness as a rider, however this has less flexibility than a policy you own yourself.

If you purchase your own critical illness insurance, a claim is then paid directly to you as a tax-free, lump sum. You can choose how to spend that money, including paying it towards your mortgage, if you wish. Or not, that’s also your choice.

It is important to note that mortgage insurance held through your lender may include some form of critical illness as a rider, however this has less flexibility than a policy you own yourself.

Yes, because the survival rate on many common conditions is quite high. In other words, if you do suffer from cancer, heart attack or stroke, there is a good chance you will live. A lump sum payment will enable you to pursue treatment options, purchase any necessary equipment or home support, or provide savings funds if you need to stop working. The key point is that the money is yours to spend as you see fit.

Yes, because the survival rate on many common conditions is quite high. In other words, if you do suffer from cancer, heart attack or stroke, there is a good chance you will live. A lump sum payment will enable you to pursue treatment options, purchase any necessary equipment or home support, or provide savings funds if you need to stop working. The key point is that the money is yours to spend as you see fit.

For quick math, 1 to 2 years of income is a good estimate for critical illness coverage. Balance the cost of insurance premiums with what you can comfortably fit into your budget.  Another way to figure out how much critical illness insurance to get is to ask yourself:

If I suffered from a heart attack, stroke, or cancer diagnosis, what would be most important to me?

Even an amount much lesser than your annual income can be very meaningful in the event of a major health concern.