A Closer Look At Critical Illness Insurance Claims In Ontario

There is much to know when it comes to critical illness (CI) claims. This guide will provide a comprehensive overview of critical illness insurance to help you to better understand the way this type of insurance product works and the claims process.

This guide will give will explore:​

• What critical illness insurance is and how it works
• What you need to know about critical illness insurance
• The differences between critical illness insurance and long-term disability (LTD) benefits
• The steps you should take before you file a critical illness claim
• Reasons why your critical illness insurance claim might be denied
• What to do if your claim is denied
  

What Is Critical Illness Insurance?

Critical illness insurance is a type of life insurance. Critical illness insurance is meant to help cover medical expenses and ease the financial stress of a difficult situation. It is considered a “living benefit” insurance that offsets your lost income during your illness and its main purpose is to help pay for additional expenses incurred by those who survive a major illness (one of the “covered conditions” under the policy).​

Types of Critical Illness Insurance

You can purchase an individual policy, or you may have critical illness insurance as part of your group benefits package at work. It is always important to read your policy to understand what illnesses are covered and what exclusions might apply. 

How It Works

Critical illness insurance pays a lump sum amount if the policy holder is diagnosed and meets the survival period. The general idea is that the lump sum covers the amount of income that may be lost while the person is off work for treatment or recovering. It can also offset the cost of private nursing care, attendant care, medications or other such needs.

What Do I Need To Know About Critical Illness Insurance?

You should always review any insurance policy you have to make sure you understand the terms and conditions.

The following are some key points about critical illness insurance claims you should keep in mind.

A diagnosis must be confirmed

Typical illnesses and diseases covered by insurance companies included cancer, Parkinson’s, AIDS, Lou Gehrig’s Disease (ALS), heart attack, stroke, organ transplants, kidney failure, paralysis and blindness.

Your policy covers specific illnesses

In most policies, the insurer reduces your LTD benefit by the full amount being received from the other source. However, in some policies, the wording may be different and only allow the insurance to only deduct a certain percentage of your CPP Disability Benefit and not the entire benefit.

You must pass a survival period

​It is important to note that before a claim can be paid, you are subject to a “survival period”, and the length of this period depends on the type of illness you have. A typical survival period is 30 days.

You can only make one claim

​The benefit is only paid once, and coverage terminates upon payout of benefits. You would not be able to make multiple claims under your critical illness policy as coverage ends once you have been diagnosed with one of the listed conditions and made a claim. Critical illness insurance differs from other types of disability insurance where you are paid weekly or monthly and your coverage remains in place even after you have made a claim.

The policy is medically underwritten

A critical illness policy (if it is an individual policy) is medically underwritten, like a life insurance policy. Your medical history and family history are carefully examined for pre-existing conditions or risks.

Who provides the diagnosis matters

​A diagnosis must be made by a qualified physician or specialist, who is licensed to practice medicine in Canada and specializes in the illness/disease you are making a claim for. The diagnosis must meet the definition of the condition.

A CI payment is not an offset

If your claim for critical illness insurance is approved, it does not reduce the amount of long-term disability benefits you are entitled to as it is not a type of income replacement benefit.

What Are The Differences Between Critical Illness Insurance And Long-term Disability Benefits

While LTD policies and CI policies have some similarities, there are also some key differences that you should be aware of.

Medical information

​Both long-term disability benefits and critical illness claims require you to submit medical information for your claim to be processed.

Frequency of benefit payment

​A critical illness policy will only pay you a one-time lump sum benefit while LTD benefits are payable monthly, if you meet the policy’s definition of total disability. As well, with LTD claims, the insurance company is also basing their decision on your level of impairment in addition to your diagnosis.

Definition of disability

LTD benefits provide a monthly income benefit if you meet the policy’s definition for total disability because of an injury (including car accident) or illness. CI policies cover major illnesses only.

How the policy is underwritten

​A CI policy is medically underwritten, meaning your medical history and family history are carefully reviewed. With disability insurance, your medical health is considered, but not as carefully examined and closely reviewed as with CI policies. In a long-term disability policy, your occupation is what is heavily weighed for the initial assessment period of your claim.

The amount of coverage you have

​When you take out an individual critical illness policy, you can choose the amount of coverage you want to be insured for and with a group policy, you have a set amount of coverage your employer has chosen. LTD benefits are usually based on a percentage of your pre-disability monthly earnings, or a set amount if there is a policy maximum in your group policy or you have chosen a flat rate in your individual policy.

Offsets

​LTD benefits are subject to offsets and can be reduced by other benefits you receive, i.e. Canada Pension Plan Disability Benefits or WSIB benefits. Critical illness insurance is not subject to offsets. You receive the lump sum amount you are insured for.

The Waiting Period

​Like LTD policies, CI policies have a “waiting period”, called a survival period, but the length of this period depends on the type of illness you have and is generally shorter than the waiting period for LTD benefits to begin.

Recurrent disability

CI coverage terminates upon payout of benefits. You cannot make another claim under that policy. Under an LTD policy, you can make a claim for recurrent disability or for another condition that occurs.

What steps should I take before filing my CI claim?

Before you file your critical illness claim, you want to be informed and aware of certain things. What follows are some suggested steps to take into consideration before filing a CI claim.

Read your policy

​You should check to see what kind of coverage you have and that your condition is covered and what the survival period is for your condition. For example, certain types of cancers may not be covered or you must have a later stage cancer in order for it to be considered a covered illness.

Collect medical and other relevant documents

​You should ask for copies of your specialist’s report which documents your diagnosis, any relevant diagnostic imaging, laboratory results or other type of relevant medical documentation. You should also keep all receipts related to your out of pocket medical expenses.

Answer the questions on the application (and any interview with the insurer) honestly

​The insurance company will review your claim and will check to see if the answers you gave are consistent with the statements you made at the time of application.

Provide the requested documentation/information

​The insurance company may require additional information. It is important to provide the requested information so that your claim can be processed faster.

Keep copies of all your medical records/documents

​You should make copies of all documents submitted to the insurance company for your own records.

Why was my CI claim denied?

There are a number of reasons why insurance companies deny claims. We have listed some common reasons below.

Unclear diagnosis

​It is important to consider that there can be differing definitions of a covered critical illness (for example, how a heart attack or stroke is described). Therefore, it is important to read your policy to find out what your policy’s definition of your condition is and that a qualified specialist make/confirm the diagnosis and provide you with supportive documentation.

Failure to provide adequate/proper documentation

​In order to process your claim, you need to provide your insurance company with documents that show your diagnosis (i.e. specialist reports).

The condition does not meet the definition of critical illness

​You may be told that your condition does not meet the definition of critical illness. This could be for a variety of reasons. One example is if the condition is considered treatable. For example, if you made a claim as a result of a cancer diagnosis, depending on the type of cancer you are diagnosed with, you may not be eligible to receive the benefit.

The condition is not covered

​Your condition might not be considered a critical illness and/or is excluded from coverage e.g. benign tumour.

Material misrepresentation or non-disclosure

If you are purchasing a critical illness policy, you should not leave out important information such as pre-existing health conditions or appear to misrepresent yourself. Sometimes insurance companies attempt to rescind (void) policies for material misrepresentation or non-disclosure and this would mean your policy is no longer valid.

Failure to pay your premiums

​If you did not pay your premiums for your critical illness within the “grace period”, it could mean that your policy is no longer in force.

What Can I Do If My Claim Is Denied?

If you find yourself in the unfortunate position where your claim has been denied, you should know that you CAN fight your insurance company’s decision.

Keep good records

• Keep copies of all correspondence with the insurance company;
• Have documented/notes from any phone calls with the insurance company;
• Have a copy of your policy;
• Have copies of any relevant medical documents used to support your claim.

Know you can seek a legal opinion

If your claim is denied, you can contact an experienced lawyer to help you fight the insurance company’s decision. You are going through a difficult time and may want assistance with the appeal process.

How can a lawyer help?

Interpret the denial letter

A lawyer who has experience handling critical illness denials can explain to you what the denial letter means and what the insurance company’s position is. Your lawyer can explain why your claim was denied and what kind of information the insurance company is looking for.

Explain limitation periods

Your lawyer can help you understand any time limits and deadlines (known as “limitation periods”) that you need to be aware of. This includes how long you have to start a court action against your insurance company.

Interpret your policy

An experienced lawyer can review your policy with you if you are uncertain as to what certain terms/provisions mean to help you gain a better understanding of your policy.

Advise you of your rights

As an insured person, you have certain legal rights and obligations which you may or may not be aware of. A lawyer can explain what these are.

Explain the legal process

The litigation process involves many steps and it can take some time before your lawsuit comes to a resolution. A lawyer can provide an overview of what the process is, from commencing the lawsuit to examinations for discovery to mediation/settlement discussions and guide you so you know what to expect over the course of your lawsuit.

Start a lawsuit

Once you have retained a lawyer, he/she can commence a court action against your insurance company if that is the avenue you wish to pursue.

As you can see, insurance companies may deny critical illness claims for a variety of reasons, but you do have the option to fight their decision.

We hope this guide has helped to give you a sense of how your claim is being assessed and what your insurance company is looking for in order to pay out your critical illness claim.