Critical Illness Guide

Types of Critical Illness Insurance Explained

Compare Term vs. Permanent critical illness coverage and understand optional riders like Return of Premium.

By EverlifeCanada Team
2024-03-20
5 min read

Term vs. Permanent Coverage

Just like life insurance, critical illness insurance comes in two main structures: Term and Permanent.

Term Critical Illness Insurance

This coverage is in place for a specific period. It is generally more affordable and well-suited for covering temporary financial risks, like a mortgage or raising children.

  • Term 10 or Term 20: Premiums are level for 10 or 20 years. After the term, the policy usually renews at a higher price or expires.
  • Term to Age 65 or 75: Coverage lasts until you reach the specified age, matching your working years. This is ideal for income protection.

Permanent Critical Illness Insurance

Permanent policies provide coverage for your entire life (or up to age 100). The premiums are usually guaranteed not to increase.

  • Level for Life: You pay a fixed premium from the day you buy the policy until a claim is made or usually age 100.
  • Paid-Up Options: Some plans allow you to pay higher premiums for a set number of years (e.g., 10 or 20 years), after which the policy is fully paid for, and coverage continues for life without further payments.

Return of Premium (ROP)

One of the most popular riders (add-ons) for critical illness insurance is the Return of Premium. Without this, if you never get sick, you "lose" the premiums you paid.

With ROP, you can get some or all of your money back if you stay healthy:

  1. ROP upon Death: If you die without making a critical illness claim, your beneficiary receives a refund of the premiums paid.
  2. ROP upon Surrender/Expiry: If you cancel the policy after a certain number of years (e.g., 15 years) or reach a specific age without making a claim, you can receive your premiums back.

Note: Adding ROP significantly increases the cost of the policy.