critical illness planning

Advances in medical technology are continually improving the chances of surviving a critical illness. However, serious illness comes with a significant financial cost that impacts clients and the people close to them. 

As clients age, the risk of at least one spouse suffering a serious health condition grows. For the average 45-year-old-couple, the chance of suffering a critical illness increases from 61.5% before the age of 70 to 90.7% up to the age of 95. 1 Help clients understand the risks and options available to keep them on track with their retirement goals.

Important client questions

You can increase client confidence in making informed decisions by discussing some key questions they have about critical illness insurance. [tweet this] Subjects include:

Taking time off to recover

Ease client worries by explaining how time off can affect incomes, career paths and return to work scenarios. Understanding the impacts of a year or more off for recovery can help clients find a recovery plan that suits their needs.

Treatment and care

Estimating expenses can be challenging and depend on diagnosed conditions, availability of treatment options, personal health insurance and expectations for care during recovery. Many treatment and recovery expenses aren’t covered by provincial health plans.

Other expenses

Recovery time can lead to additional costs for gas, car maintenance, parking, accommodation, and time off work for a travel companion or caregiver. Health issues could also lead to early retirement, preventing clients from being able to save as much as planned.

Key financial strategies

You can offer clients a few financial strategies to choose from to help protect them in case of a serious illness. [tweet this]


  • Clients set aside money to build assets that will be used to fund retirement lifestyle goals. If necessary, these savings will be used to help cover costs while recovering from a serious illness or for other emergencies
  • Clients may be able to withstand the financial impact at the time of illness if they have built up enough assets
  • If a critical illness strikes before a client has built up sufficient assets, they may not have enough funds to cover costs

Share the risk

  • Clients buy a critical illness insurance plan to help cover the risk of a serious illness during their working years and early retirement
  • They self-fund the cost of the illness recovery if it occurs later in retirement
  • The estimated amount of income (including salaries and bonuses) they’d lose while taking time of work to recover affects the insurance amount each client chooses
  • The return of premium on cancellation or expiry (ROPC/E) is available if the insurance isn’t used

Transfer the risk

  • Clients purchase lifetime critical illness insurance plans to transfer the risk of a serious illness occurring at any age
  • The critical illness insurance benefit amount purchased reflects the cost of recovery and how it might inflate over the next 40 to 50 years
  • Their protection is in place for life
  • If they don’t use their coverage, the return of premium on death (ROPD) benefit will be paid to the beneficiary

Choosing the best option – a look at Sam & Anita

Sam and Anita (age 45) have started planning for their retirement, with $40,000 already saved. They plan on maximizing their contributions to pension plans, registered retirement savings plans (RRSPs) and tax-free savings accounts (TSFAs) to fund their basic retirement needs. The couple is also planning to build their savings to fund their retirement lifestyle goals. Working with their advisor, they are assessing the risk and planning for the effect a serious illness could have on their goals in retirement.

Sam & Anita have a few different retirement path options to choose from. If Sam is diagnosed with cancer at age 55 and requires three years to recover, the couple will need $140,000 to help cover the costs of Sam’s illness during his recovery. Costs to consider may include lost income, out of pocket health-care expenses, travelling to receive treatment and other expenses. Afterwards, he and Anita will continue with their retirement strategy.*


The couple contribute $8,000 each year to their non-registered assets. At 55, all deposits stop, and withdrawals are made in the three years of Sam’s recovery. The $8,000 annual deposit to non-registered assets resumes at age 58. By 70 years of age, Sam and Anita have accumulated $159,000 in non-registered assets. 2 There may be no funds available in the event of a serious illness in the future.

Sharing Risk

Sam buys $150,000 Sun CII T75 with ROPD and ROPC/E – age 65 and Anita buys $100,000 Sun CII T75 with ROPD and ROPC/E – age 65. Their total yearly premium is $6,813 leaving $1,187 deposited annually into non-registered accounts. With critical illness protection, Sam’s $150,000 Sun CII benefit helps to cover his expenses during recovery while Anita keeps her Sun CII coverage. Their non-registered assets are untouched and continue to build.

At age 65, Anita cancels her coverage and receives the returnable premium amount of $65,000. Their non-registered assets, including the returnable premium, equal $294,000 by the age of 70 and are available in the event of a serious illness or to pay for retirement lifestyle expenses. 3

Transferring Risk

Sam purchases $150,000 Sun CII lifetime (T100) with ROPD. Anita purchases $150,000 Sun CII lifetime (T100) with ROPD. Their total yearly premium is $6,564 leaving $1,436 deposited annually into non-registered accounts. With his critical illness protection, Sam’s $150,000 Sun CII benefit helps to cover his expenses during recovery. Anita keeps her Sun CII coverage. 4 Their non-registered assets are untouched and continue to build.

Anita’s critical illness insurance remains in place. The ROPD benefit will be paid to her beneficiary if the coverage is in place but unused at Anita’s death.
*The financial strategies the advisor presents to Sam and Anita are based on a beginning non-registered balance of $40,000. The before tax growth rate is 5% and the couple has a marginal tax rate of 45%.

Critical illness insurance helps

Help clients protect their assets. Talk about the benefits of critical illness insurance and support them in reaching their retirement goals.  Some important things to remember:

  • Critical illness insurance helps protect clients’ financial plans from the impact of a serious illness. Clients will receive a one-time benefit that can be used in whichever way they choose to.
  • With critical illness insurance, there may be no need to withdraw funds from investment portfolios and any unused money can be put back into savings.
  • Clients can customize their plan by adding return of premium options.

If you have questions or want more information about Sun CII, contact the Sun Life insurance sales support team.

1 Based on data from the Canadian Pensioners’ Mortality Table (published by The Canadian Institute of Actuaries, 2014) and the 2008 Canadian Critical Illness Tables (published by The Canadian Institute of Actuaries, July 2012).

2 Sun Life Financial, Imagine the impact, A conversation with Sam and Anita, 2017.

3 Ibid.

4 Ibid.