The cover people skip, and later wish they had.

What problem it solves

Life insurance handles the case where your income stops permanently. Disability insurance handles the case where it stops for a while. Critical illness handles a third case that neither covers well: you survive, and it is expensive.

Alberta Health pays for your treatment. It does not pay your mortgage during eight months of chemotherapy, or for the drug your oncologist wants that is not on the provincial formulary, or for your spouse to take unpaid leave to drive you to appointments, or for the flights to a specialist in Toronto. Those are ordinary consequences of a serious diagnosis and they land on a household at the exact moment its income has fallen.

How the money works

• You are diagnosed with a covered condition, as the policy defines it.
• You survive the survival period — usually 30 days.
• The insurer pays you a tax-free lump sum. Not the hospital, not a creditor. You.
• There are no conditions on what you spend it on.

That last point is the whole appeal. It buys time, and time is what a household in the middle of a diagnosis has least of.

Read these three clauses before anything else

1. The definitions. “Cancer” in a contract usually means life-threatening cancer, with early-stage and non-invasive forms either excluded or paid at a reduced partial benefit. “Heart attack” requires specific diagnostic evidence. A contract covering four conditions generously can beat one covering twenty-five narrowly.
2. The pre-existing condition and moratorium clauses. Most contracts exclude cancer diagnosed, or symptoms first appearing, within 90 days of coverage starting.
3. Partial benefits. Better contracts pay a reduced benefit — often 10 to 15 per cent — for early-stage conditions such as ductal carcinoma in situ or stage A prostate cancer, without ending the policy. This is where good contracts separate from cheap ones.

How much, and for how long

A common starting point is one to two years of household income, or enough to cover fixed costs for eighteen months. Unlike life insurance, the goal is not to replace an income permanently — it is to remove financial pressure from a period of recovery.

On term length, most people are covering their working years. Coverage to age 65 or 70 is typical. Permanent critical illness exists and costs considerably more; the case for it is narrower than the case for permanent life insurance.

Who should look at this first

• Self-employed people and contractors, who have no sick pay and no group benefits.
• Single-income households, where one diagnosis removes all the income at once.
• People with a family history — while it is still straightforward to underwrite. This is one product where waiting genuinely costs you.
• Anyone with a mortgage and no savings buffer, which is a fair description of most first-time buyers in Edmonton.