Financial Consequences of Critical Illness Worry Canadians

Younger Canadians more concerned than older counterparts: RBC Insurance Study

TORONTO, January 13, 2003 – A new study released today by RBC Insurance says nearly half (45 per cent) of Canadians are worried that they won’t be able to cover their expenses if they become critically ill.

The survey, conducted by Ipsos-Reid, found that only 54 per cent of Canadians believe they will have sufficient funds to cover their expenses in the event of critical illness.

Surprisingly, younger Canadians, (85 per cent) are more likely than their middle-aged (79 per cent) or older counterparts (70 per cent) to worry that they or someone in their family may become critically ill. This group (52 per cent) is also more interested than middle-aged (38 per cent) or older (23 per cent) Canadians in hearing more from a financial advisor about insurance that can provide peace of mind in the event of critical illness.

“People know that a serious illness such as cancer, stroke or heart attack can have a dramatic affect on their family’s financial security and lifestyle,” said Kathryn Giffen, president and COO of the life insurance division of RBC Insurance. “It’s also important that Canadians be aware that there are products that will allow them to recover from illness and maintain their quality of life without the stress of taking on debt or depleting retirement savings.”

Critical illness insurance is an innovative product first developed in the 1980s and research shows that it is now one of the fastest selling insurance products in Canada. This insurance pays a one time lump sum benefit to policyholders, designed to help them manage the costs associated with critical illness — and can be used for anything from paying off a mortgage to taking a recuperative vacation.

Critical illness insurance takes on increased importance in light of statistics from the Heart and Stroke Foundation and the Canadian Cancer Society that show one in two men and one in three women aged 40 and under will develop coronary heart disease; one in four Canadians is at risk for stroke; and almost one in three Canadians will develop some form of cancer in his or her lifetime. The advances of modern medicine and technology mean more Canadians are surviving these illnesses.

Other key findings from the RBC Insurance survey:

  • Maintaining their current lifestyle (80 per cent) and being able to pay their bills (78 per cent) are the top concerns of Canadians if they should become critically ill; followed by being able to support their family financially (73 per cent), losing their job (60 per cent) and being able to contribute to their RRSPs (53 per cent). In general, younger people are more likely to be concerned about these things than older people;
  • Men (57 per cent) are more likely than women (52 per cent) to believe they can cover their expenses if critically ill;
  • Despite rising popularity, 53 per cent of respondents have not heard of critical illness insurance.

The survey also found that those who did not already have this insurance wanted to know more. Sixty three per cent of those who had a financial advisor – but not critical illness insurance – believed it important to be advised about the product by their advisor.

“Canadians should ensure their financial plan takes into consideration all their insurance needs,” said Giffen. “Critical illness insurance is one of the components of a comprehensive financial plan.”

These are the findings of an Ipsos-Reid/RBC Insurance poll conducted between October 16 and October 20, 2002. The poll is based on a randomly selected sample of 1,000 adult Canadians. With a sample of this size, the results are considered accurate to within plus or minus 3.1 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. These data were statistically weighted to ensure the sample’s regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.

About RBC Insurance

RBC Insurance, through its operating entities, including RBC Life Insurance Company, provides a wide range of creditor, life, health, travel, home, auto and reinsurance products to more than five million North American customers. As one of the top 10 life insurance producers in Canada, RBC Insurance offers individual and group life and health insurance solutions, including term insurance, universal life policies, group benefits, critical illness insurance and long term care insurance. These products are distributed through more than 7,000 independent brokers affiliated with producer groups, financial planning firms and stock brokerage firms, as well as through direct sales and a network of career sales agents. For more information, please visit www.rbcinsurance.com.

About RBC

Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBC as a prefix for its businesses and operating subsidiaries, which operate under the master brand name of RBC Financial Group. Royal Bank of Canada is Canada’s largest financial institution as measured by market capitalization and assets, and is one of North America’s leading diversified financial services companies. It provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services on a global basis. The company employs 60,000 people who serve more than 12 million personal, business and public sector customers through offices in North America and some 30 countries around the world. For more information, please visit www.rbc.com.

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