Critical Illness Insurance and a Power of Attorney

Learn more about why having a power of attorney and critical illness insurance are essential to protect you from anything unpredictable.

April 1, 2021

Life can be unpredictable. There is no way of knowing what is waiting around the corner for us. This is why putting vital protections in place, such as a critical illness insurance policy and a power of attorney, will ensure you and your family are taken care of should things suddenly take a turn for the worse.

Continue reading to find out what you can do to protect your family, your assets and yourself.  

What is critical illness insurance?

Old man in hospital bed

Critical illness insurance provides you with a tax-free payment should you develop a serious medical condition. Your policy will define which conditions are covered. Some common examples include heart attack, stroke, and cancer.

With a critical illness policy in place, should you become sick with a serious illness, you can focus on your recovery without worrying about the costs. Also, you are free to spend the payout however you like.

So how does critical illness work?

Like a standard life insurance policy, with a critical illness insurance policy you pick the coverage you want and pay the associated premiums. If you are diagnosed with a life-threatening condition, after filing a claim, you will receive your benefit. In some cases, you may have to wait a certain period before you receive the benefit, depending on your policy and medical condition.

What is a power of attorney?

A power of attorney is a written authorization that you give to a person you trust to represent you or act on your behalf in legal matters. The person who authorizes the other is the grantor, donor, or principal. The person who receives the authority to act or represent is the attorney or agent. You may give another person the legal authority to represent you or act on your behalf on all matters or specific matters, such as selling assets, payments of bills, and more.  

So who can be a power of attorney?

You can appoint anyone you trust as your power of attorney, as long as the person is over the age of 18, and capable of making sound decisions.

What is a power of attorney for personal care?

A Power of Attorney for Personal Care (POAPC) is a legal document. In some provinces, it may also be referred to as a Personal Directive, a Healthcare Directive, or a Representation Agreement.

This document allows you to give someone you trust the authority to make decisions about your personal care should you be incapable of making them. Personal care can include the following:

  • Medical Treatment
  • Healthcare
  • Clothing
  • Housing
  • Safety
  • Hygiene

The person to whom you give this authority is called your “attorney”. However, this does not mean that they are your lawyer. Generally, people give this power to their spouse, a close relative, or a close friend. That is, to someone whom they completely trust. Before you appoint someone, have a frank discussion with them. This is to ensure they understand your wishes clearly and completely.

You should strongly consider choosing a POAPC, however it is not mandatory. A POAPC gives you peace of mind, since you know your health will be in the hands of someone you trust completely. If you do not appoint a POAPC and become incapable of making personal care decisions, the court will appoint someone to make them on your behalf. This person may or may not be someone whom you want in that position.

Why both critical illness insurance and a power of attorney for personal care are important.

Critical illness insurance and POAPC are different things. The following points outline the key differences between them.

  • Critical illness insurance involves a payout — whereas a POAPC does not.
  • A critical illness might not make you mentally incapable. For example, a heart attack may require home health care, but it may not affect your ability to make sound decisions. Similarly, it is possible that a condition may not be critical yet require a POAPC. So, not all critical illnesses may trigger a POAPC, and not all conditions that need a POAPC may be critical.

Critical illness insurance protects your family from the financial implications of a life-threatening condition. A POAPC, on the other hand, gives you control over who will make decisions regarding your personal care — and the critical illness payout — if you become incapable of making the decisions yourself.

For instance, should you suffer a stroke, your critical illness coverage will come to your aid. The payout may help you pay off some or all of the medical expenses arising due to this condition. However, having a stroke does not necessarily mean your POAPC will commence making decisions on your behalf.

  • As long as you are in a position to make sound personal care decisions, the POAPC will not be necessary.
  • However, if you become unconscious at any point, your POAPC will make decisions on your behalf. And once you recover consciousness and are able to make decisions, your attorney will no longer be needed. However, your critical illness coverage will continue to cover you.

How to get critical illness insurance and a power of attorney for personal care?

Putting a critical illness plan in place is simple and easy, as is setting up a POAPC.

If you are looking for a critical illness insurance policy, we recommend you shop around as rates vary widely from one provider to another. The best course of action is to get in touch with an independent broker such as Dundas Life. After learning about your insurance needs, we will provide you with multiple quotes from leading insurers. This, in turn, will help you make an informed decision when choosing the best policy for you.

When it comes to naming someone as your POAPC, you can either get in touch with a lawyer or use an online estate planning tool. The latter is more affordable and convenient, so it comes as no surprise that many people take this route when they want to make a Will and name a POA.

Conclusion

You should make these decisions now, while you are capable. Buying critical illness insurance and setting up a Power of Attorney for Personal Care are two decisions you will not regret making, should you fall ill.

When you put these two vital protections in place you ensure your personal health care decisions will be made according to your wishes and your family will not suffer financially without you there to provide for them.

Frequently Asked Questions

  1. Who can be power of attorney?

You can name anyone you trust as your attorney. This person, however, must be at least 18 years of age. You give your attorney the power to act for you. They can either have broad legal authority or limited authority to make decisions related to your property, medical care, and finances.

  1. Who can notarize a power of attorney in Ontario?

A legal professional, like a notary or a lawyer, can notarize a power of attorney in Ontario.

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