Critical illness vs. disability insurance

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There are significant differences between critical illness insurance and disability insurance, but both can provide substantial financial protection for lawyers and their firms, says Dawn Marchand, vice-president of marketing and direct distribution for CBIA/Lawyers Financial.

Critical insurance coverage offers a one-time disbursement if the person covered is diagnosed with one of the serious illnesses listed in the policy and survives a specified waiting period, which is usually 30 days, Marchand tells AdvocateDaily.com.

"It's a one-time payment and it's tax-free," she says.

While most policies cover nearly two dozen conditions, about 80 per cent of claims involve heart attacks, stroke and life-threatening cancers, Marchand says.

Critical insurance allows a person to continue working and collect on the policy, says Marchand.

"You probably don't need as much critical illness coverage, but it's good to have — just in case something happens and you have to retrofit your home, for example," she says.

Money from a critical illness plan could also cover expenses for trips to seek a second opinion or to support a caregiver.

“The good news is more people are surviving critical illnesses,” says Marchand. “But the last thing one needs is a financial strain."

Disability insurance provides coverage for a loss in personal employment income as a result of a serious illness or accident, she explains.

"It's meant as an income replacement. It's an ongoing, monthly payment based on a percentage of your income, depending on the coverage chosen in the policy," Marchand says.

"It's paid as long as you're unable to work until the time that is stated in your policy," she says. "For example, some are payable until the age of 65, or 71. Benefits can also be paid for a total or partial disability. Basically, it's coverage to protect your income."

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