Optional Group Critical Illness Insurance in Canada

Many Canadian employers provide extra benefits beyond the standard group critical illness insurance. It is called optional critical illness insurance. 

Unlike individual critical illness policies purchased directly by consumers, this option offers guaranteed-issue amounts with no health questions asked. This allows employees to get more coverage without undergoing full medical underwriting.

Understanding optional group critical illness insurance will allow employers and employees to make informed decisions about this beneficial coverage.

What is Optional Group Critical Illness Insurance?

Optional group critical illness insurance is supplemental coverage you purchase through your employer’s group benefits plan. It requires you to actively enroll, pay premiums, and choose your coverage amount.

Here are 2 points that make the Optional group critical illness insurance differ from individual policies:

• Group plans allow for guaranteed-issue amounts up to a stated threshold, without any health questions or medical underwriting during initial enrollment.
• Premium rates for group coverage are lower due to the purchasing power of being part of a more significant risk pool.

Moreover, you can usually increase your coverage during important life events, such as getting married or having kids. Some plans also allow you to switch to an individual policy if you leave your job, so you can maintain your protection without needing to reapply medically.

Who Can Be Covered Under an Optional Group Critical Illness Insurance Plan?

Optional group critical illness insurance can cover not just employees but also their family members, with some requirements and limitations. Its 2 typical dependent coverage includes:

• Spouses: Most plans allow employees to purchase coverage for a legal spouse or common-law partners.
• Children: Dependent children up to age 21 or 25, if full-time students, can also be covered for a flat benefit amount.

Additionally, self-employed individuals who are part of professional associations or chambers of commerce can often obtain optional critical illness plans at group rates. Business owners can also opt for group plans to receive better rates compared to individual plans. 

Which Providers Offer Optional Critical Illness Insurance in Canada?

The Canadian group critical illness insurance market features several carriers. Four major providers are Sun Life, Manulife, iA, and Canada Life. Below are the key features of their plan for this product.

Sun Life Financial

Sun Life Financial is the largest provider of group benefits in Canada. The company has processed thousands of claims annually, with 56% related to cancer diagnoses. 

They offer optional critical illness coverage amounts ranging from $10,000 to $500,000, which can be customized to fit individual needs. This plan also includes complimentary Best Doctors services, which provide medical second opinions and expert consultations for complex cases.

Its covered conditions are:

• Cancer (life-threatening)
• Heart attack
• Coronary artery bypass surgery
• Stroke
• Kidney failure
• Major organ transplant (liver, lung, heart, kidney, pancreas)
• Multiple sclerosis
• Alzheimer’s disease
• Parkinson’s disease
• Paralysis
• Blindness
• Deafness
• Loss of speech
• Severe burns
• Coma
• Benign brain tumour
• Motor neuron disease
• Occupational HIV infection
• Aortic surgery
• Heart valve replacement
• Loss of limbs
• Aplastic anemia
• Bacterial meningitis
• Primary pulmonary hypertension
• Progressive systemic sclerosis

Employees can enroll in guaranteed coverage of up to $50,000 within 30 days of eligibility without needing to complete medical questionnaires.

Source: The Win-Win of Optional Critical Illness Insurance – sunlife.ca

Manulife

Manulife is considered Canada’s second-largest insurance company. It provides group benefits to over 12,000 plan sponsors across the country.

Their optional critical illness coverage starts at a minimum of $10,000, with customizable increment amounts based on your budget and protection needs.

Quite similar to Sunlife, this product also covers:

• Cancer (life-threatening with a 90-day waiting period)
• Acute myocardial infarction (heart attack)
• Stroke (cerebrovascular accident)
• Coronary artery bypass surgery
• Kidney failure requiring dialysis or transplant
• Major organ transplant as a recipient
• Multiple sclerosis with confirmed diagnosis
• Paralysis of two or more limbs
• Parkinson’s disease
• Alzheimer’s disease or dementia
• Benign brain tumour requiring surgery
• Blindness in both eyes
• Deafness in both ears
• Loss of speech
• Severe burns (third-degree, 20% of body surface)
• Coma lasting 96+ hours
• Motor neuron disease (ALS)
• Occupational HIV infection
• Bacterial meningitis with neurological deficit
• Loss of limbs (two or more)
• Heart valve replacement
• Aortic surgery
• Aplastic anemia
• Fulminant viral hepatitis

Notably, the online application process is available 24/7. It can eliminate paperwork and reduce processing times to just 48 hours for guaranteed issue amounts. Coverage options are also available for spouses and dependent children, typically ranging from $5,000 to $10,000 per child.

Source: Optional critical illness insurance – manulife.ca

iA Financial Group

iA Financial Group Employee Benefits ranks as Quebec’s largest insurance company. They serve Eastern Canada with services in both French and English.

You can get up to $50,000 in optional group critical illness insurance coverage without a medical exam initially, and up to $500,000 if you go through the medical underwriting process.

Their plan is categorized into 10 categories:

• Cancer 
• Stroke
• Cardiovascular (Heart attack, coronary bypass, heart valve replacement, aortic surgery)
• Organ-Related (Kidney failure, major organ transplant, liver failure)
• Neurological (Multiple sclerosis, Parkinson’s, Alzheimer’s, motor neuron disease)
• Paralysis and Sensory Loss (Paralysis, blindness, deafness, loss of speech)
• Trauma (Severe burns, coma, loss of limbs)
• Blood Disorders (Aplastic anemia, primary pulmonary hypertension)
• Infections (Bacterial meningitis, occupational HIV, fulminant hepatitis)
• Partial Benefits (Early-stage cancers, coronary angioplasty (10% of coverage amount))

You can claim for different categories, even after claiming for one condition. The company has developed a new approach to organizing critical illness coverage, enabling you to claim multiple times for various types of conditions.

Source: Optional critical illness insurance – ia.ca

Canada Life

Canada Life focuses on providing benefits to government workers. They serve federal, provincial, and city employees across Canada. With 175 years of experience, they have built a strong reputation for reliable claim payments.

Their optional critical illness insurance plan provides coverage of $25,000 for employees, $10,000 for spouses, and $5,000 per dependent child. It protects the insured person from:

• Life-threatening cancer
• Heart attack (acute myocardial infarction)
• Stroke with measurable deficit
• Coronary artery bypass surgery
• Kidney failure (end-stage renal disease)
• Major organ transplant
• Multiple sclerosis
• Paralysis (paraplegia, quadriplegia, hemiplegia)
• Parkinson’s disease
• Alzheimer’s disease
• Blindness
• Deafness
• Loss of speech
• Severe burns
• Coma
• Benign brain tumour
• Motor neuron disease
• HIV infection (occupational or medical)
• Aortic surgery
• Heart valve replacement or repair
• Loss of limbs
• Aplastic anemia
• Bacterial meningitis
• Major organ failure on the waiting list

One thing to note is that all applicants must complete health questionnaires to facilitate proper risk assessment and maintain reasonable premium rates. 

Source: Optional critical illness insurance – gov.nl.ca

What Factors Affect Optional Group Critical Illness Insurance Cost?

Premium rates for optional group critical illness insurance plans vary based on 4 primary factors: your age when you enroll, the coverage amount you select, your gender, and whether you use tobacco. Here’s how each factor affects your premium:

Age

Insurance companies set premium rates based on separate brackets because the risk of critical illnesses increases with age. Common age groups are 18-24, 25-29, 30-34, and so on, up to age 65. Younger employees (ages 18-24) pay lower premiums, but the costs generally double every ten years.

Coverage amount

Higher coverage amounts typically result in higher premiums. Most providers let employees to choose coverage in increments of $10,000 or $25,000. It enables them to adjust their protection to fit their budget.

Tobacco Use

Tobacco use is a major factor that affects insurance premiums. Smokers pay 40% to 60% more than non-smokers, regardless of age. To get non-smoker rates, insurance companies usually require you to be tobacco-free for 12 months, which includes cigarettes, cigars, chewing tobacco, and nicotine replacements.

Gender 

Gender affects insurance premiums based on age. Younger women might pay more because of higher risks for multiple sclerosis and autoimmune diseases. Meanwhile, older men often have higher premiums due to the increased risk of cardiovascular issues. 

Why Consider Optional Group Critical Illness Insurance?

Optional group critical illness insurance delivers clear value for employees. However, sometimes, having this service can be a waste of money for those who do not really need it. Its value depends on your financial situation during illness, your current safety nets, and how the premium fits into your budget.

Here are 5 advantages when employees purchasing this plan over buying individual coverage directly from an insurance company.

Competitive Rates

Group plans allow employers to leverage their buying power to get better rates based on having a more significant risk pool. Employees benefit from lower premium costs that are unavailable through individual policies. Premiums are also paid conveniently through payroll deductions.

Guaranteed Coverage

Most group critical illness insurance plans allow employees to obtain guaranteed coverage without any medical questions during an initial enrollment period. Employees can obtain coverage up to the guaranteed limit regardless of pre-existing conditions.

Tax Benefits

Premiums paid through payroll deductions are paid with pre-tax dollars. Lump-sum payouts are also tax-free when received.

Added Protection

The lump-sum payout can be a financial lifeline in the event of a serious illness, providing funds to cover expenses that disability insurance or government health care programs may not cover. Payouts are flexible and not tied to specific costs.

Portability

Most plans allow employees to take their coverage if they leave their jobs without demonstrating insurability again. This option ensures continued coverage.

Optional group critical illness insurance enhances an employer’s benefits package while providing employees with extra financial security. It’s a mutually beneficial arrangement.

Advantages of Optional Group Critical Illness Insurance for Employers

From an employer’s perspective, implementing optional group critical illness insurance also comes with advantages. Here are 5 points that businesses should consider:

• Expanded Benefits: Optional plans augment any employer-paid core critical illness coverage. This improves the competitiveness of the overall benefits offering.
• Increased Satisfaction: Employees appreciate it when additional voluntary options are made available by their employer. This contributes to greater workplace satisfaction.
• Recruiting Tool: The availability of optional critical illness insurance demonstrates that the employer cares about employee welfare. This supports talent acquisition efforts.
• Retention Driver: Providing portable coverage that employees can take with them even after they leave the company discourages job-switching to get better benefits.
• Differentiation: Being one of the few employers offering this voluntary coverage distinguishes the company’s benefits package from competitors.

Therefore, while requiring minimal effort, making optional critical illness insurance available allows employers to strengthen their benefits profile.

How to Claim Optional Group Critical Illness Insurance

Successful enrollment requires understanding timing requirements, documentation needs, and underwriting processes specific to group plans. The process involves 5 key steps:

Step 1: Diagnosis 

After the effective date, the insured employee or covered dependent receives an official diagnosis of one of the medical conditions covered under the policy. Often, an initial survival period of 30 days following diagnosis is required before a claim can be made.

Step 2: Notify the Insurer

The insured then notifies the insurance company of their intent to make a claim and completes the initial claim forms. This includes authorizing the release of medical records so the insurer can verify the diagnosis.

Step 3: Insurance Review

The insurance company reviews medical documentation to confirm the diagnosis meets the policy definition for the specified critical illness and that the effective date of coverage precedes the diagnosis date.

Step 4: Claim Approval

Once verified, the claim is approved, and the applicable lump-sum payout is made to the insured based on the level of coverage purchased. Payout typically occurs within 1-2 weeks of claim approval.

Step 5: Exclusions Review

Any applicable exclusions or limitations are also reviewed to determine if they impact the claim. For example, a 90-day exclusion period for cancer coverage after the initial effective date.

The streamlined claims process is intended to provide funds to the insured as quickly as possible to aid in their treatment and recovery from a severe illness.

How Do Employers Structure These Optional Group Critical Illness Insurance Plans?

Employers have options when designing optional critical illness insurance plans to provide as part of their benefits package:

Defined Benefit vs. Salary Multiple

The employer chooses whether the coverage amount will be a fixed dollar amount, such as $10,000, or a multiple of the salary, such as 1x or 2x.

Guaranteed Issue Threshold

This is the coverage amount an employee can obtain without medical underwriting. Higher amounts require evidence of insurability.

Covered Conditions

More comprehensive plans cost more but may be desirable. They must balance costs while adequately meeting employee needs.

Voluntary vs. Contributory Funding

Employers can elect to pay all or a portion of premiums as a benefit or have employees pay 100% of premium costs.

Benefit Reductions

Benefits can be structured to reduce after age 65 when other coverage options exist.

Developing a competitive yet cost-effective critical illness insurance option requires determining the optimal plan design and eligibility parameters.

Key Considerations Before Purchasing An Optional Group Critical Illness Insurance

While optional group critical illness insurance can provide valuable protection, there are some essential considerations employees and employers should keep in mind:

Exclusions

Most policies include standard exclusions for pre-existing conditions, self-inflicted injuries, acts of war, and illegal activities. Other exclusions like recreational drug use may also apply.

Pre-Existing Condition Clauses

Coverage for pre-existing conditions is often limited during an initial exclusion period after the effective date, such as 12 months. Diagnosis or treatment for an illness during the exclusion period may be precluded from coverage.

Qualifying Periods

A waiting period of typically 30 days between diagnosis and coverage payout must be satisfied. Some policies also have an exclusion period for cancer, such as 90 days.

Policy Definitions

The detailed definitions for covered illnesses and conditions should be reviewed closely to determine applicable coverage triggers.

Declining Health

Employees who experience health declines after enrollment may not qualify for higher coverage later without medical underwriting.

Carefully examining policy documents allows employers and employees to be informed consumers of optional group critical illness insurance.

The bottom line

Optional group critical illness insurance helps employees  financially recover from severe illnesses without needing medical underwriting.

For employers, these plans enhance their benefits profile as a tool to attract talent, retain employees, and increase workforce satisfaction.

By learning about all aspects of optional group critical illness insurance outlined here, employers can make informed decisions about making this important coverage available and educate employees on how it supports their financial well-being.

FAQs about Optional Group Critical Illness Insurance