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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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Freedom 55 Financial is a division of The Canada Life Assurance Company and the information you requested can be found here.

Disability vs. critical illness insurance: What’s the difference?

Key takeaways

  • Critical illness insurance coverage can provide a one-time, tax-free lump sum payment if you’re diagnosed with a serious condition.
  • If an illness or injury keeps you from working, disability insurance can give you a tax-free monthly benefit to help you pay your expenses by replacing some of your earnings.
  • Depending on your situation you may need only critical illness or disability insurance but there are many times when you need both to fully protect yourself.

What is critical illness insurance?

Critical illness insurance coverage can provide a one-time, tax-free lump sum payment if you’re diagnosed with a serious condition. Your policy will specify the conditions and requirements of your insurance coverage, but some examples include many kinds of cancer, heart attack and stroke.

What is disability insurance?

Disability insurance works when you can’t. If an illness or injury keeps you from working, disability insurance can give you a tax-free monthly benefit to help you pay your expenses by replacing some of your earnings.

What’s the difference between critical illness and disability insurance?

How each type pays

Critical illness insurance provides a tax-free, one-time payout. Disability insurance provides a monthly income replacement.

When do you receive the payment

Critical illness insurance pays when you’re diagnosed with a covered condition. Disability insurance pays if you can’t work because of injury or illness.

Will you have to wait for coverage?

With critical illness insurance, there may or may not be a waiting period depending on the covered critical condition experienced. With disability insurance, you’ll usually have to wait.

How long does coverage last?

With critical illness insurance, you can choose coverage for a period of time or your lifetime. Disability insurance ends at age 65.

What can you use the money for?

With critical illness insurance, you can use the payment for whatever you need including medical expenses, your mortgage, other debt, living expenses, travel for treatment, even domestic help.

Disability insurance payments are ideal for covering monthly expenses.

How much does it cost?

The cost of both types of insurance will depend on your unique situation and the amount of coverage you require.

Disability insurance premiums often range from 1 to 9% of your salary, but each case is different.

Do you need both critical illness and disability insurance?

Depending on your situation, you may need only critical illness or disability insurance but there are many situations when you need both to fully protect yourself. 

Critical illness and disability insurance work together to help reduce the impact of disability or serious illness. And even if your workplace benefits offer some insurance, you may require additional insurance to properly protect your financial security.

What’s next?

  • If you have benefits through Canada Life, sign into your online account to see much critical illness and disability insurance coverage you currently have.
  • Determine how much critical illness and disability insurance coverage you need.
  • Determine if you need life insurance or health and dental insurance.
  • Determine if you're eligible for Portable Benefits.

The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. 

Full details of coverage, including limitations and exclusions that apply, are set out in the policy of insurance.

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