What is a Critical Illness Rider? - Insurance Rider Series 3
It is week three of our series of posts about life insurance riders. This post is all about critical illness riders and what they do, why someone would want one, and a special type of critical illness rider known as a second event rider.
If you haven’t already read the previous posts about what an insurance rider is, and term riders, we recommend you give it a look before you or after you read this.
What is a critical illness rider?
Well it’s an insurance rider designed to provide a lump sum payment to policyholders who are diagnosed with a covered illness, such as cancer, heart attack, stroke, kidney failure, and other conditions that no one wants to have.
There are several reasons why someone may choose to add a critical illness insurance rider to their life insurance policy in Canada.
One reason is to ensure that they have financial support if they are diagnosed with a serious illness.
A critical illness can be emotionally and financially draining, and having a lump sum payment from a critical illness insurance rider can help alleviate some of the financial burden.
It can help cover expenses such as medical bills, home renovations to accommodate for a disability, or lost income due to taking time off work.
In fact, a common expense critical illness pay outs are used for is to pay for the travel and accommodations for loved ones to come and stay with those who experience such illnesses.
Critical illness riders and disability insurance coverage.
Another reason to add a critical illness insurance rider is to complement disability insurance coverage.
Disability insurance covers loss of income due to a disability, while critical illness insurance provides a lump sum payment to cover expenses related to the illness itself.
Having both types of insurance can provide a comprehensive safety net in the event of a serious illness.
It is important to note that critical illness insurance riders typically have specific terms and conditions, including the types of illnesses covered.
It is important to review the policy details and consult with a financial advisor or insurance agent to determine if adding a critical illness insurance rider is the best option for an individual’s needs and circumstances.
Second event riders
A more specific type of critical illness rider, only provided by Canada Life, is called a second event rider.
A “second event” rider provides additional coverage for a specific condition if the person has already suffered a certain covered condition.
For example if an individual had received a critical illness benefit for a Heart Attack or Stroke prior to age 65 the second event rider will cover them for Life-Threatening Cancer if it occurs within 11 years of the survival period.
This ensures that if they are to suffer multiple illnesses. Then all their bases are covered, and they will be financially protected.
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
Related Insights
Wealth and Legacy: A Deep Dive with Vince Cardella
In this episode of The Wealth Multiplier Podcast, host Laurent Munier of Safe Pacific Financial sits down with Vince Cardella, Principal of Strategic Wealth Planning...
RRSPs for Canadian Business Owners, should you invest?
You have two main options: keep the funds inside the corporation or withdraw and invest personally. Today we’re going to go through these 2 scenarios...
Leveraging Your Whole Life Insurance Policy as Collateral for Loans in Canada
When it comes to building financial security and achieving your goals, creativity and strategy are essential. Today, we’re exploring a powerful tool that can open...
The 6 Essential Principles of the Infinite Banking Concept Explained
Here’s what you aren’t understanding about Infinite Banking. Building anything of lasting value begins with a solid foundation—the basics. While Infinite Banking may seem like...
The Capital Dividend Account: A Comprehensive Guide for Business Owners
Why does it exist, and how does it work? Let’s break down the essentials of this game-changing tax provision called the CDA We at Safe...
Merry Christmas – Safe Pacific 2024 Highlights
We’ve been advising Canadians about life insurance and their personal finances for over a decade, almost 15 years now. But today’s video is a little...
Christmas Party 2024 Photo Gallery
Thanks to all who came out to celebrate the season at our annual Christmas Party. We hope you all enjoyed the festivities at The Vancouver...
Interview with the Head of Individual Insurance Business at Equitable Life: Martin Reeves
Equitable Life has long been a trusted name in the Canadian insurance landscape. Recently, we had the privilege of sitting down with Martin Reeves, Head...
The Infinite Banking Strategy for Canadian Business Owners: How It Works and Why It’s Effective
Growth has rocketed especially since the federal government has been increasing taxes on everything – especially you and me, the greedy business owners who make...
Top 5 Ways Infinite Banking Benefits Canadians
Now, this isn’t just some financial theory for us. I've been using this strategy personally and we’ve been setting it up for our clients for...
Are TFSAs good for small business owners?
One of the main tax advantaged accounts you can use in Canada is the TFSA – Tax Free Savings Account. This is one of our...
Family Office vs. Multi-Family Office: Key Differences, Benefits, and Which is Right for You
Now obviously, every family office is going to be different from family to family, however there is an important distinction between a single-family office and...
