Critical illness insurance is personal coverage that guarantees a lump-sum payment when you have certain critical health issues.

How it works: A critical illness insurance contract covers several conditions. If you are suffering from any of these illnesses while you are covered by this insurance, your insurer will pay you a specific amount of compensation based on the details of your contract.


Critical illness and death

The compensation is paid even if you do not die from the insured illness. However, some insurance policies may require that you survive for 30 days after your diagnosis before it will pay out compensation.

End of the insight

What can the compensation guaranteed by critical illness insurance be used for? Consider the following situation.

Marcel is 50 years old and has just learned that he has cancer. He doesn’t live in the city and the treatments he needs are not available at his local hospital. Therefore, he has to travel into town and rent an apartment where he can stay in between his visits to the hospital. His travel and accommodation costs are very expensive. He is in a difficult financial situation: Not only have his expenses gone up, but because of his illness and treatments, he can’t work.

However, Marcel had taken out critical illness insurance against cancer. Thirty days after his diagnosis, his insurer pays him the $100,000 benefit stated in his insurance contract. This means that Marcel can continue his treatments without worrying about not having enough money.

Life insurance v. Critical illness insurance


Life insurance

Critical illness insurance

When does the insurer pay the lump-sum benefit?

When the insured person dies

When the illness is diagnosed, or soon after

Who receives the money?

The persons named as beneficiaries in the insurance contract

Generally, the insured person


Products that go together well

Critical illness insurance does not replace life insurance any more than life insurance replaces critical illness insurance. They are different products that protect insureds against different risks.

End of the warning

Critical insurance reminder

If you decide to take out critical illness insurance, here’s some information to keep in mind.

Premium options

Each contract is different in terms of the premiums you must pay. For example, with some insurance contracts, you may have to pay for as long as you are covered, while with others, you may have to pay premiums only until age 65.  

Premium return option

Some insurance contracts may, in certain circumstances, return the premiums you’ve paid. This option is not available in all contracts. For example:

  • Return of premiums if you survive at the end of the contract
    If you do not claim compensation at the end of a critical illness insurance contract, your insurer may return the insurance premiums you have paid. After this payment, you will no longer be insured by your critical illness insurance.
  • Return of premiums if you die during the contract
    If you die from an illness other than one of the illnesses indicated in your contract while you are insured by critical illness insurance, some insurers will offer to return your paid premiums to your heirs. In this case however, they will not receive any death benefit, since critical illness insurance is not life insurance.

Critical illness and premiums payable

Check the details of your insurance contract carefully. Which illnesses will be compensated and what will your insurance premiums be? Over what periods do you have to pay them? This information varies from contract to contract.