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What To Avoid (1 of 6)
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Critical Illness Insurance Policy
Restrictions & Exclusions
To Be Avoided

Policy Restrictions and/or Exclusion Commentary
1. Right To Change Premiums:  

“We reserve the right, upon thirty one day’s notice to you prior to any renewal date, to change at any time, and from time to time, renewal premium rates for the Policy.  When such change is made, it shall be applicable to all policies of this kind then in force.”

This provision appears to give the carrier an open invitation to increase premiums at will.  The scary part is that it doesn’t stipulate a maximum amount of such increases.  Increases will also retroactively affect in force policies.

Premiums should be fully GUARANTEED.
2. Right To Terminate Policy:  

“We may terminate this Contract at any time by giving written notice of termination to the Owner. . . .”  “where it is mailed to the Owner, 90 days of notice of termination will be given . . “

This policy does not provide any assurance that you will have coverage when you need it.  The company could terminate coverage at a time when you are uninsurable.

Policy should be fully GUARANTEED
and NONCANCELLABLE.
3. Adjustable Premiums:  

“Premiums on this product renew every ten years and are adjustable.  Premiums will never be increased by more than 25% of the premium shown in the premium schedule.”

It would be prudent to budget for a 25% increase, at time of purchase.

Premiums should be fully GUARANTEED.
4. Guaranteed Renewal Provisions:  

“We will not cancel this policy, reduce the benefits or add any restrictive riders.  We do retain the right to increase premiums for all members of your insured class.”

This provision does not limit the amount of potential increases.  Such increases are not restricted by region or province and it is unclear whether or not the limits are by gender, age or what?

Premiums should be Guaranteed
Not to be increased.
5. Taxes:  

“Any taxes (other than premium taxes) applicable under this policy are to be paid by the Owner when due.  We accept no responsibility for any unpaid taxes owed by the Owner in respect of this policy.”

Obviously the carrier is attempting to discreetly turn the policy into an adjustable plan in order to pass on future taxes of any kind.  What do they define as a “Tax”?

 Policy should NOT have such a provision.
6. Beneficiary For Return Of Premium Upon Death To Be Estate:  

“The reason we are not allowing beneficiaries is because our review of both the insurance act and the income tax act indicates that critical illness Insurance cannot be defined as life insurance.  If it isn’t life insurance, there can’t be a beneficiary.  Accident and sickness insurance which is what this (C.I.I.) is (has) a benefit paid to the policy owner.”

In the event of the insured’s death, the Return of Premium Benefit will not pass to the intended beneficiary tax free.  Instead, it will become part of the deceased’s estate, require probate and definitely incur unnecessary charges and costs.

Policy should permit a designated
Named Beneficiary.
7. Cancer Detected Within 90 Days Of Issue - Coverage Excluded and Policy Terminated:  

“There shall be no coverage under the Insured Condition definition of Cancer, if any symptom or medical problem of yours, which initiated any investigation leading to the Diagnosis of Cancer, commenced within the 90 days following the later of the Issue date and the date of last Reinstatement, of the policy.  In the event of any Diagnosis based on such a symptom or medical problem, the policy is terminated, and our sole liability in respect of the policy shall be limited to a refund, to the Policyowner, of the premiums due and paid since the latter of the Issue date and the date of the last Reinstatement of the policy.”

This provision gives the carrier the right to cancel the entire policy at a time when the insured is unable to purchase another critical illness policy.  Definitely, no benefit should be paid for cancer; however, it seems unfair and extremely harsh to terminate the entire policy considering the insured might suffer a totally unrelated event, at some future date, that would be covered by another listed condition.

Policy will NOT pay any cancer benefit;
but should NOT

Terminate the remaining covered conditions in the policy.