When buying a critical illness policy could make sense

It was about eight years ago that Brooke Robinson bought a critical illness insurance policy due to her family’s history of breast cancer, only to trigger it six years later for an entirely different and unexpected reason.

“I actually ended up with multiple sclerosis and it was a very aggressive version of it,” says Robinson, 33.

“I was diagnosed in April of 2015 and by October of 2015 I was walking with a cane.”

Today, she credits her critical illness payout for allowing her and her husband to take three months off work so they could move from Toronto to Ottawa where she underwent an experimental procedure that has allowed her to walk again without assistance.

While Robinson’s workplace disability insurance made up for some of the couple’s lost income, she says it wouldn’t have been enough to cover the $15,000 of extra expenses they incurred.

“Without the treatment I had, I would be in a wheelchair right now and I wouldn’t be able to work or be in an office,” she says. “It would have been a disaster.”

Critical illness insurance may be effective at covering costs that disability insurance doesn’t.

Financial planner Rona Birenbaum says the most compelling reason to buy a critical illness policy would be if someone isn’t eligible for disability insurance — for instance, a stay-at-home parent who doesn’t have an income to replace.

But it could also help someone unprepared for the financial hardships that may come with a critical illness diagnosis such as the cost of medical treatment or for a spouse to take time off work.

Unlike disability insurance, which protects your income to age 65 and generally kicks in after 90 days of disability, critical illness insurance pays out a lump sum in the event of critical illnesses such as cancer, a stroke or a heart attack.