Life Insurance with Critical Illness: Bundle or Buy Separately?

Do you need life insurance and critical illness insurance?

Life insurance and critical illness insurance offer financial support for Canadian families in two different circumstances: after an unexpected death and after a major medical diagnosis. 

• Life insurance offers a tax-free lump-sum payout to your beneficiaries if you die within the policy term. 
• Critical illness insurance pays out a tax-free lump sum to you if you’re diagnosed with a covered critical illness, like a heart attack, stroke, or certain cancers, within the policy term. 

You can buy both types of insurance as standalone plans, or you can purchase critical illness insurance as a rider to a life insurance policy — an optional form of coverage you can add to your main policy for an additional cost.

How to get life insurance with critical illness coverage

You can purchase life insurance and critical illness coverage as separate, standalone policies, or combine the two using a critical illness rider for life insurance. 

Add CI as a rider on your life insurance policy 

Many life insurance policies offer critical illness coverage as an available rider, or an add-on benefit tied to your life insurance.

Buy two standalone policies 

Purchasing two separate policies — one for life insurance and one for critical illness coverage — gives you greater freedom to customize and maximize each benefit, but it may be more costly. Comparing the best critical illness insurance can help you find the right fit for your family and finances.
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A lot of people come into the conversation with misconceptions about life insurance. Some expect a one-size-fits-all family policy, but in Canada, coverage can be built through a mix of individual and joint policies depending on your needs. – Christelle Arouko, Licensed Insurance Advisor at PolicyMe

Critical illness life insurance rider vs. standalone policy — how to choose

Choosing between a critical illness rider and a standalone policy depends on how much coverage you need and how much complexity you're willing to manage.

Choose a rider if you want to simplify your coverage

If you have no family history of serious illnesses and you’re looking for a simple supplement to your life insurance coverage, a CI rider may be the best fit. It’s a way for low-risk individuals to add a little extra financial protection to their insurance portfolio while keeping costs and policy upkeep easy to manage. 

Choose standalone policies if you want to maximize your coverage

If you have a family history of serious illness or would need significant financial help in the event of a life-threatening diagnosis, it may be worth the extra time and money to invest in a separate critical illness insurance policy.

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Looking for comprehensive coverage?

PolicyMe’s critical illness insurance plans cover 44 conditions, including cancers, heart attack, multiple sclerosis, organ failure, organ transplant, and severe burns.

Can you have a critical illness rider and standalone policy at the same time? 

Yes, you can have a critical illness rider on a life insurance policy and standalone critical illness coverage. While less common, there are some situations in which it might make sense:
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• You want to maximize your coverage limits: Critical illness insurance is usually capped at a certain coverage amount, often around $1–$2 million. Adding a critical illness rider to your life insurance while holding a separate CI policy extends your coverage by providing two lump-sum payments in the event of a covered diagnosis.‍
• You have workplace life insurance with a CI rider: If you have a workplace life insurance plan with a critical illness rider but worry it doesn’t offer enough coverage, a standalone policy lets you further customize your insurance portfolio.

FAQ: Life insurance with critical illness