Key Takeaways
- You can add critical illness insurance to your life insurance as a rider or buy two separate policies.
- Critical illness insurance riders are cheaper, but subject to more limitations than standalone plans.
- A standalone critical illness plan may be beneficial if you lack workplace benefits, have a family history of serious illness, or want more robust coverage.
- PolicyMe’s critical illness insurance covers 44 conditions, including 27 fully covered and 17 early-stage conditions.
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.
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Purpose
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Financial support for your family after unexpected death
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Support for living expenses and healthcare costs after a serious medical diagnosis
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What triggers a payout?
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Death of the policyholder
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Diagnosis with a covered condition
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Type of benefit
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Death benefit
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Living benefit
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Common uses
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Funeral costs, income replacement, mortgage payments, children’s education
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Medical expenses not covered by health insurance, childcare, home care, lost income
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Coverage term
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5–40 years; permanent coverage also available
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10–30 years or until a certain age
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Average premium cost
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$25–$45 monthly
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$30–$50 monthly
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Get Canada’s most complete critical illness coverage with PolicyMe.
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 critical illness 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.
How it works: With a critical illness rider on your policy, a qualifying diagnosis triggers a tax-free lump-sum payout from your total life insurance death benefit. Since the critical illness rider payout is taken from your policy’s death benefit, it usually reduces the death benefit your beneficiaries receive.
Pros of critical illness riders for life insurance
- Convenient. Receive multiple benefits through a single policy
- Affordable. You’ll generally pay less for a rider than for a standalone plan
Cons of critical illness riders for life insurance
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Less coverage. Critical illness riders tend to cover fewer conditions than standalone policies
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Reduced death benefit. In some cases, a critical illness claim can reduce the remaining death benefit on your life insurance policy
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More restrictions. CI and life insurance are different products, but your CI coverage may be subject to age and coverage restrictions based on your life insurance policy terms
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.
Pros of a standalone critical illness policy
- More coverage. Standalone critical illness insurance policies can cover over 40 conditions, while riders may cover fewer
- Choose your insurer. Your life insurance provider may not have the most competitive CI coverage, and vice versa
- Customize as you see fit. Standalone policies let you tailor each plan to your particular needs and circumstances, including policy terms, benefit amounts and more
Cons of a standalone critical illness policy
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More expensive. Standalone plans have their own premiums, which tend to be more expensive than rider add-ons to existing policies.
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More administrative upkeep. Two policies mean two shopping journeys, two monthly payments, and two separate claim processes
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
Choosing between a life insurance 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 rider may be a good 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.
- Convenient
- Typically cheaper than standalone policies
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Limited coverage
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May reduce your life insurance death benefit
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May have age and coverage restrictions
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.
- More coverage
- Payout is separate from your life insurance policy death benefit
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Typically higher costs
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Requires a second application and independent maintenance
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.
Get a quote for the coverage that fits your life.
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:
- 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 critical illness policy extends your coverage by providing two lump-sum payments in the event of a covered diagnosis.
- You have workplace life insurance with a critical illness 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
A critical illness rider on a life insurance policy combines critical illness insurance with life insurance. Riders are policy add-ons that can add supplemental benefits to your core policy. CI riders typically have more limited coverage than standalone CI policies, but can be a simple and efficient way to combine two insurance products in one.
It’s generally cheaper to add critical illness insurance to your life insurance policy than to buy a separate CI policy. Keep in mind, though, that the cheapest option may not be the best for you and your loved ones. Take a look at the fine print and policy restrictions that would apply to a CI rider before you make a decision.
If your critical illness insurance is attached to your life insurance policy as a rider, a critical illness payout may reduce your total life insurance death benefit. Check your policy details and read the fine print before adding a CI rider to whole or term life insurance.
You can add critical illness coverage to an existing life insurance policy but you may need to undergo new underwriting, which could include a medical exam, to add the rider.
Life insurance and critical illness insurance serve different purposes, so many Canadians benefit from having both. If you have dependents, a mortgage, or other major financial responsibilities, life insurance is worth considering. If you have a family history of illness, or concerns about the financial burden a serious medical diagnosis would put on your family, critical illness coverage may also be beneficial.
The conditions covered by critical illness insurance in Canada may vary by insurance provider, but most policies and riders cover major illnesses such as cancer, heart attack, major organ failure, multiple sclerosis, stroke and coronary artery bypass surgery. Some providers also cover early-stage conditions, such as PolicyMe’s critical illness insurance, which covers 17 early-stage and 27 fully covered conditions.
A critical illness rider is an optional add-on to a life insurance policy. As a policy rider, critical illness coverage pays out a tax-free lump-sum payment from the policy’s death benefit amount if you’re diagnosed with a covered critical illness while the rider is in effect. It’s important to note that receiving a critical illness rider payout may reduce the life insurance death benefit received by your beneficiaries.
Critical illness insurance covers conditions such as cancer, heart attack, organ failure, stroke, and other major conditions. The exact covered conditions vary depending on the insurance provider.
A critical illness insurance payout can be used however the policyholder sees fit, including replacing lost income while recovering, covering out-of-pocket medical expenses, paying for childcare, managing the cost of homecare modifications, or covering everyday expenses during treatment and recovery. Unlike traditional health insurance, there is no obligation to use a critical illness payout to cover costs strictly associated with the qualifying health condition.
A critical illness rider may be worth considering if you want additional financial protection in case of a serious medical diagnosis without buying a separate policy. They are generally more convenient, affordable and easier to manage than standalone critical illness insurance. With that said, critical illness riders may cover fewer conditions depending on the policy, and they typically reduce your life insurance death benefit since the payout is taken from your life insurance coverage. A standalone policy is usually a better fit if you’re seeking more comprehensive coverage, separate from your life insurance policy.
Yes, most critical illness insurance policies include waiting periods, but the exact timeline depends on the condition and insurance provider. For example, PolicyMe has no waiting period for 24 covered conditions (including all covered cancer conditions), but other conditions may require waiting periods for a payout. Before purchasing a policy, be sure to review the terms to understand the waiting periods and limitations.
Yes, you can get life insurance with a pre-existing condition, but the type of policy may vary depending on your health condition and the insurance company’s underwriting process. Some insurance providers accept individuals with pre-existing conditions for standard coverage, although higher premiums and exclusions may apply. In other cases, you may be offered another type of policy, such as no medical life insurance, which is typically more expensive.
The cost of adding a critical illness rider to a life insurance policy is typically between $10 and $40 per month in Canada. The exact cost varies based on factors such as your age, health, and the level of insurance coverage you want. In general, you’ll pay less for smaller payout amounts, shorter terms, and fewer covered conditions. On the other hand, you’ll pay more if you have pre-existing conditions or a higher coverage amount.
