Critical Illness insurance is a fairly new product by the insurance companies to combat the growing concern over illnesses such as strokes and cancers. The main difference is that although these illnesses are serious and prevalent, due to the improvement in medicine, people who contract these illnesses do not necessarily die from them. Thus, the insurance now focus on survival rather than death.

Illness, most often, can drive you to the brink of bankruptcy. Some people believe that they have enough RRSPs that can cover them in case such a situation strikes them. But do you really want to use the money that you have allotted for your retirement? It is okay to be poor when you are young, but it is a tragedy to be poor when you are old. The situation is exacerbated by the fact that due all the baby boomers retiring in Canada, pension plans, private and public are in crisis. How are they going to fund the simultaneous retirement of the aging population?

Consider the estimated costs of certain necessities when you are ill:

Nursing Assistance and homemaking services $27,000

Van and Wheelchair Adaptations to vehicle $46,000

Home Renovations (Bathroom / Ramp) $25,000

Total Cost $98,000

To withdraw this amount from your RRSP you would need $178,182 because of course, your RRSP is fully taxable at redemption. How many of us can afford to lose that much in our RRSP to fund our illness? Another thing to consider is Critical Illness Insurance is tax free.

Do not rely on the social net in the government because that is subject to change when governments and their mandates change. Also, they do not give you a choice. When you are ill and hurting, you will want a choice, a choice of treatment, a choice of recovering facility and a choice of whether you would like your spouse to take off work to care for you or hire someone. Critical Illness insurance gives you that choice without hurting your future retirement income.