Understanding Insurance Basics

Life and Health Insurance

Health insurance

There is a variety of health insurance products available that could help you:

• pay for services that your regular health care plan does not cover
• supplement your income if you suffer a major illness or severe injury
• pay for your medical expenses if you become ill while on vacation.

Check your policy to find out if there is a deductible or if the amount payable is limited to a maximum percentage of the overall claim, or a maximum annual amount.

Supplementary health insurance pays for health services, such as prescription drug and dental services, not generally covered by provincial or territorial government health plans.

Before buying supplementary health insurance, check your employer's benefits plan to make sure that you do not buy coverage you already have. For example, you may already have dental coverage through your employer's plan.

Disability insurance replaces a portion of your regular income for a specified time if you cannot work temporarily or are permanently disabled due to an injury or illness, such as loss of a limb, a heart attack or an operation.

Some plans pay tax-free benefits while others are taxable. Generally, if you pay the entire amount of the disability premium yourself, any disability benefits you receive will be tax-free. However, if your employer pays all or part of the disability premium, your disability benefits will be considered taxable and subject to income taxes.

Keep in mind that permanent disability insurance does not necessarily mean that you will receive benefits for the rest of your life. The term “permanent” refers to the nature of the disability, not to the payments from the insurance company.

Each insurance provider has different definitions of what permanent disability means and the criteria that must be met before you can file a claim.

Travel medical insurance pays for medical treatment while you travel outside of Canada.

The policy may not provide coverage for medical conditions you had before applying for coverage, so read the policy carefully.

Critical illness or trauma insurance pays a one-time lump-sum payment if you are diagnosed with a critical illness that is specified in your policy, such as cancer or Alzheimer's disease.

There are often exclusions, so read the policy carefully. Be sure you know what is and is not covered.

Long-term care insurance can provide coverage if you enter a long-term care facility such as a nursing home. It may also provide coverage for the services of a caregiver while in your own home. Some conditions and restrictions may apply.