It’s always heartbreaking to read the stories behind crowdfunding campaigns to help families of sick children. Cancer, cerebral palsy, cystic fibrosis… Parents are worried, they have put their lives on hold and their financial situation is precarious. Is health insurance the answer?
Posted at 6:30am
Unfortunately, it’s not true that it only happens to others. The others could be us. Parents of seriously ill children can confirm this.
And despite our universal healthcare system, a cancer diagnosis comes with a multitude of costs. Parents who have to be away from work to be at their child’s bedside are no exception: lost wages, transport, parking, eating in the canteen, work to adapt the house to the wheelchair, medication not covered by the Régie’s health insurance de Quebec (RAMQ). Maybe they also need help around the house, cleaning, eating, caring for other children.
There’s an affordable way to avoid the financial turmoil that serious illness can cause, argues Antoine Auger, financial planner at IG Wealth Management. You can insure your child against critical illnesses, an option parents often don’t think about or voluntarily rule out.
“A lot of people say that paying for this type of insurance means they admit their child may be ill. As if it would bring bad luck. Others think the insurance companies are frauds,” observes Antoine Auger.
I don’t know if people with life insurance die earlier, but I can understand insurers’ distrust. We’ve all heard stories of endless struggles to get paid. In order not to be disappointed and to have confidence, “the most important thing is to understand this type of policy,” stresses Jeffrey Morrow, financial security advisor at Desjardins, while making sure his employer “writes a lot of checks.” In 2021, the Autorité des marchés financiers (AMF) also recommended that insurers better explain the product, which is often misunderstood in Quebec.
What you need to know is that a predefined list of diseases is covered, sometimes accompanied by injuries (severe burns, loss of a limb).
At Desjardins, for example, the list has 29 conditions and it is possible to add more as an option. Canada Life’s, although different, covers about the same number. The aim is to cast a broad net, rare diseases are not covered. It’s a pity, because they also incur considerable costs. As for the cancer, it has to be “life-threatening,” which rules out “malignant melanoma skin cancer,” for example. Does this spec cause fights? Not really, because the contracts are detailed, I’m told.
Important note: The insurance does not cover the costs caused by the illness. When diagnosed, a tax-free amount is paid at once (with some exceptions). It can be used as parents wish.
Like life insurance, critical illness insurance can be permanent or temporary, a more affordable option. For example, you can insure your child for 10, 18 or 25 years: “90% of the insurance policies I sell to my customers are limited. It’s cheap and it does the job. ! ‘ says Antoine Auger.
If budget is an issue, he recommends choosing a shorter duration, but a sum large enough to make a significant impact. Because the aim of the police is to reduce financial burdens in difficult times.
Rather than buying permanent insurance for a small $25,000 or $50,000, I prefer my clients to buy term life insurance for a large amount.
Antoine Auger, Financial Planner at IG Wealth Management
“What makes the difference? I think having $1 million in a bank account will handle your new reality better than $25,000,” the financial planner illustrates.
At Desjardins, the “Health Priority – Child” insurance is mandatory at all times. The cooperative does not provide temporary protection.
The advantage of this font: it can be practically free. We’ll pay for it for 20 years and if it’s not used we’ll be refunded any premiums paid. In reality, we are only robbing ourselves of the return that would have been had the money been invested.
The adult child can also choose to keep their insurance for the rest of their life. In this case, he will not be reimbursed, but he will remain insured without ever paying a penny. The policy could prove useful as the diseases covered include dementia, Alzheimer’s and Parkinson’s. The heirs benefit from the premium refund in the event of death if no claim has been made.
Before purchasing permanent insurance for a child, according to Antoine Auger, you must have “maximized your RESP, RRSP and TFSA and have no debt.” Because it makes more sense to invest the premium gap elsewhere. As always, it is important to consult an expert to assess your needs, compare policies and make calculations.
One thing is certain in any case, the ideal is to pay your insurance without ever making a claim …