Critical Illness Insurance Provides Peace of Mind for Business Owners

The then 35-year-old Vancouver-based owner of an independent automobile body repair shop bought the $100,000 10-year term policy on the advice of his adviser, a policy that cost him $53.50 a month. “My advisor said: ‘As a self-employed business person, you should have this coverage,’” he recalls.

Before his 10-year term was up, he had filed a claim. “In 2010, I was actually diagnosed with MS,” Mr. Ruddy said. In addition to paying for his time off work, his mortgage and his car, the lump-sum insurance payout allowed Steve to travel to Mexico and California to undergo a $13,000 experimental new treatment for MS.

“I didn’t have to think about working every day,” said Mr. Ruddy, now 49. “I would have had to use my savings, take out a loan or asked family to help.”

An experienced Canadian insurance advisor, Carmen Metz, knows all about critical illness insurance as she suffered from one (now recovered) and is also an insurance advisor. “If you’ve got a business or young children, where is the money going to come from? It’s really important to have,” Carmen says. “Ninety per cent of my sales are critical illness insurance.”

Critical illness insurance covers an individual against illnesses such as heart attack, stroke and cancer and is sold in terms of 10 years, 20 years, to the age of 75 or the age of 100, with the option to lock in premiums. Policies can range from covering three medical conditions to as many as 24. Best of all, critical illness insurance policies pay out a tax-free lump-sum that may be used for whichever purpose the policy holder desires.

They have a variety of riders, such as a return-of-premium rider; a second-event rider, which offers limited coverage if you are diagnosed with a second critical illness; a loss of independent existence rider; and a disability waiver-of-premium rider, which lets you off the hook for the premium if you’ve been totally disabled for 90 days.

A monthly premium for a 10-year, $100,000 policy for a 40-year-old non-smoking male, for example, is $50 on average, which adds up to $840 a year. That rises to about $100 a month for a 50-year-old male non-smoker, totalling $1,200 a year.

Perhaps it is time to consider how well your family and your business could cope financially if you suffered a serious illness or injury. Life insurance provides financial protection if you die. Who provides financial protection if you suffer something serious and live?

Simply put, critical illness insurance provides peace of mind for business owners - and that is something that is difficult to put a price on.

Related Reading: What to Know When Making a Critical Insurance Claim