Can You Truly Rely on Employer Group Insurance for a Critical Illness?

Upon closer look, it becomes readily apparent that this is in fact not the case. In fact, Canadians are often unknowlingly significantly exposed to the risk and consequences of a serious illness if they are wholly relying on their employer group coverage.

Depending only on critical illness insurance provided by employers can put you in trouble in many cases, primarily due to restrictions and being under-insured.

As such, it is almost always advisable to buy an individual insurance policy.

Here's why:

1. Personal Factors

The amount of critical illness insurance an individual needs depends on a variety of factors including family size, goals, and liabilities. An employer will not consider these unique individual factors and the usual result is a policy that does not provide nearly enough coverage.

2. Restrictions

Critical illness insurance under an employer group plan almost always contains significant restrictions: much more so than are associated with individual critical illness plans. For example, there may be fewer critical illnesses covered under a group plan.

3. Premium Creep

Group insurance policies are renewed annually by an employer and each year premiums must be renegotiated, most often leading to premium increases. Under an individual critical illness policy, premiums do not change for the entire term of the policy.

4. Change of Jobs

When you change your job, the critical illness insurance provided by your old employer is very likely not to be continued. In the new job, your employer may or may not provide similar insurance. Moreover, if the new employer provides insurance, you will be taking it at a higher age, which may make it more expensive.

5. Entrepreneurship

If you wish to leave the corporate world and start your own business or freelance, you will not have any insurance if you do not have an individual critical illness policy.

6. Cost Cutting

Employers sometimes wish to cut costs. In such cases, they may choose to discontinue this benefit because it is an additional cost to the company. This may happen when you are much older. This means that when you buy a fresh policy, it will be more expensive.

7. Waiting Period

You may want to shift from one job to another but have a waiting (or "probation") period of three months. During this period, if you are not covered by any insurer, your family will not receive any benefits if something untoward happens to you.

In addition, upon satisfying this waiting period, the pre-existing condition clause is reset.

Conclusion

You have seen that group insurance for a critical illness can be cancelled, premiums increased and lack portability. Most importantly, they generally possess significant restrictions that either do not provide you with enough benefits or simply none at all.

Individual critical illness insurance plans do not have these limitations. If you develop a serious illness you will thank yourself for putting into place an individual critical illness policy that provides you and your family with the funds necessary to maintain your standard of living and pay for additional medical costs.