Types of Health Insurance Plans in Canada: A Guide

In Canada, we’re fortunate to have universal health care coverage. Each province and territory offers its own health insurance plan, which generally covers services like doctor’s visits, hospital care, emergency treatment, and certain diagnostic tests.

At the same time, provincial and territorial plans don’t cover every type of health-related expense. For example, routine dental care, prescription medications taken outside of hospital settings, and medical costs that arise while travelling internationally may not be included. Because of this, many Canadians choose to supplement their public coverage with additional health insurance.

Some people receive this extra coverage through group health insurance plans offered by their employer, while some Canadians purchase private coverage to complement their provincial or territorial plan and any workplace benefits.

In this guide, we’ll look at four types of health insurance available in Canada with RBC Insurance — disability insurance, critical illness insurance, hospital insurance, travel medical insurance,— to help you understand how they work and what role they may play alongside provincial or territorial health coverage.

Understanding health insurance in Canada

Canada’s public health care system helps ensure residents can access essential health care without facing large medical bills. However, these plans are designed to cover medically necessary services — not every health-related expense.  Each province and territory decides which services are medically necessary and how much will be covered, if at all.

The reality is, many everyday health costs may fall outside provincial or territorial coverage, including prescription medications, dental care, vision care, physiotherapy, and cosmetic procedures.

When these costs crop up, Canadians often have to pay out-of-pocket. And the financial impact of a health issue can go beyond just the medical bill. A serious illness or injury may also mean time away from work and lost income.

This can leave many Canadians financially vulnerable. An RBC Insurance poll found that 91 per cent of Canadians don’t have critical illness insurance — yet 57 per cent say they worry about becoming seriously ill and not having enough savings.   

Because of this, some Canadians consider additional coverage to help manage certain costs that may arise during major health events. Options such as critical illness, disability, and hospital insurance can help address gaps in provincial or territorial plans and provide an added layer of financial protection (and peace of mind!).

Disability insurance

Before the age of 65, about one in four working-age Canadians will experience a disability that prevents them from working for an extended period of time.

At the same time, many Canadians say they can’t afford to take time away from work when they need it. An RBC Insurance poll found that 50 per cent of working Canadians said they would have liked to take time off work for their disability but couldn’t afford to.

Disability insurance is designed for situations like this. It can help to replace a portion of your income if you can’t work, helping you keep up with everyday expenses while you recover. Some plans, like RBC Insurance’s disability insurance, may also offer support services, such as rehabilitation or job retraining, to help you transition back to work.

There are two forms of disability insurance: short-term and long-term. The difference depends on how long the coverage lasts.

• Short-term disability insurance replaces part of your income if you’re temporarily unable to work due to an illness or injury. It typically provides a tax-free benefit for several months, but the exact duration varies by plan.

• Long-term disability insurance usually kicks in after your short-term benefits end. It generally replaces a percentage of your income — often 60 or 70 per cent — with a tax-free benefit for a longer period of time. Again, this varies by the plan.

Who needs disability insurance?

Disability insurance can matter for almost anyone who relies on their income to pay the bills. But it can be especially valuable if you’re the primary income earner in your household or have dependants. If you suddenly couldn’t work, the financial impact could be significant — even devastating.

While the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) offer disability benefits, eligibility requirements can be strict and benefits are based on your contributions. Private disability insurance may help to supplement those programs.

It can also be worth considering if you’re self-employed or don’t have disability coverage through your employer. Without that safety net, your livelihood could be at risk.

Even if you have coverage through an employer, insurers vastly differ in how they define “disability.” Some plans only require that you’re unable to perform the duties of your current job in order to receive benefits. Others may expect you to return to work in a different role if you’re able to do so. In some workplace disability plans, for example, benefits may change if you’re considered capable of working in another role or occupation.

Individual disability insurance policies may offer more flexibility in how disability is defined, and some may continue paying benefits if you’re unable to return to your regular occupation, even if you’re capable of working in another role. As always, the exact terms depend on the policy.

Another advantage of getting your own disability insurance is portability. Employer-sponsored plans typically end once you leave your job, whereas a policy you purchased on your own stays with you.

Critical illness insurance

A critical illness is a serious, life-altering health condition. Common examples include cancer, heart disease, and stroke, which also make up the bulk of most critical illness insurance claims.

With critical illness insurance, you receive a tax-free, lump-sum payment if you’re diagnosed with a covered illness. Unlike disability insurance, which typically replaces income through monthly payments, critical illness insurance provides a one-time payout. And while disability insurance is designed for people who earn an income, critical illness coverage can be purchased by anyone.

It’s also different from extended health insurance, which helps cover medical expenses like prescriptions, dental care, and paramedical services. Critical illness coverage is triggered by the diagnosis of a covered condition.

Conditions that may be covered (depending on your plan) include:

• Blindness

• Cancer

• Coma

• Deafness

• Dementia

• Heart attack

• Kidney failure

• Loss of limbs

• Organ transplant

• Paralysis

• Parkinson’s disease

• Stroke

One of the main advantages of critical illness insurance is flexibility. The lump-sum payment can be used as needed while you’re recovering. That could be for hiring home care, making home modifications, or paying for treatments not covered by provincial or territorial health plans.

Because of the flexibility — and the potential financial impact of a critical illness — some people choose critical illness insurance to complement other types of health insurance. If you purchase an individual policy, the coverage typically stays with you even if you change jobs or are between roles. Employer-sponsored coverage, on the other hand, may end when you leave the organization.

Who needs critical illness insurance?

Critical illness insurance can be worth considering if you want additional financial support in case of a serious medical diagnosis.

For example, if you have a family history of conditions such as cancer or heart disease, this type of coverage may provide added reassurance. Those who work in high-stress jobs or have non-traditional work schedules may also want to consider critical illness coverage. Research has found that shift workers, for instance, may have a higher risk of heart-related health issues.

It may also be useful if you have limited savings, are self-employed, or have loved ones who rely on your income. In situations like these, a serious illness could create financial strain while you’re recovering.

For older Canadians, critical illness insurance can also play a role in planning for future long-term care needs. With RBC’s Critical Illness Recovery Plan, between the ages of 55 and 65, you can convert some or all of your coverage to long-term care insurance without providing proof of insurability.

Hospital insurance

In Canada, hospital stays are generally covered by your provincial or territorial health plans — but there can still be limits. For example, if you want a private or semi-private room, that upgrade usually isn’t covered. Some tests or procedures may also fall outside public coverage if they aren’t considered medically necessary. In some provinces, ambulance services may also involve out-of-pocket costs.

Hospital insurance helps to fill this gap. If you’re hospitalized, the policy may provide a tax-free cash benefit that you can use however you need — whether that’s paying for a private room, home care, childcare, or other everyday expenses while you’re off your feet. Some plans allow you to choose coverage for accidents only, while others include both sickness and accidents.

It’s a lesser known but valuable coverage option. Most plans generally don’t require a medical exam, and premiums typically don’t increase with your age.

Who needs hospital insurance coverage?

Anyone could need hospital care at some point, but some may find this type of coverage especially helpful.

For example, people who want the option of a private hospital room may appreciate having coverage for upgrades that are typically excluded in provincial plans. Parents or primary earners may also value the flexibility of a cash benefit that could be used for childcare or household expenses during recovery.

If you don’t have a workplace benefits that include hospital coverage, you might consider adding a hospital insurance policy as part of your broader personal health insurance coverage.

Travel medical insurance

Getting seriously sick or injured is stressful enough. Having it happen while travelling can make things even more complicated.

Provincial and territorial health plans provide limited coverage for medical treatment outside of Canada. Health care in other countries can be sky-high: In the United States, fixing a broken leg can cost up to $7,500 (USD), and a three-day hospital stay averages around $30,000 (USD).^[1] On top of that, it can be difficult to access the right help in an unfamiliar destination.

Travel medical insurance can be a lifesaver. While general travel insurance covers things like trip delays or lost baggage, travel medical insurance specifically covers health care during your trip. This includes things like:

• Doctor’s visits

• Emergency hospital care

• Prescription medications

• Emergency dental care

• Medical evacuation and repatriation

With RBC travel medical insurance, emergency medical bills may be paid directly to the hospital or provider. Depending on the policy you choose, there may be no deductible payment required.

Another perk is 24/7 worldwide emergency assistance. If you need help, most providers, like RBC Insurance, can help find trusted medical care, communicate with health professionals, and coordinate billing and treatment, wherever you are in the world.

Who needs travel medical insurance?

Travel health insurance is essential for anyone who plans to travel within Canada or aborad. Provincial health plans offer limited coverage outside Canada, and foreign medical bills can reach tens of thousands of dollars — often payable upfront. The Canadian government also recommends it, even if you’re travelling for just one day.

It may be especially useful for families travelling with children, retirees or snowbirds who spend extended time abroad, and anyone visiting destinations where medical care is particularly expensive, such as the U.S.

Also, some destinations require proof of travel insurance to enter the country. Similarly, some tour operators may require travellers to have coverage before joining a trip.

How to choose the right health insurance plan for you

There’s no single health insurance plan that works for everyone. The right coverage depends on your job, your family, your finances, and where you are in life. Here are some tips to nail down what you might need.

Assess your current coverage

Start with reviewing any benefits you already receive. Does your employer offer a benefits package? If so, what’s included? And how much is covered? Some treatments or prescriptions may only be partially reimbursed.

You should also understand what your provincial or territorial health plan covers. Many don’t cover services like ambulance rides, physiotherapy, mental health counselling, and routine dental and vision care.

If these are services you expect to use and they’re limited — or you don’t have workplace benefits — additional coverage may be worth considering.

Identify coverage gaps

Once you know what’s covered, ask yourself if it would be enough if something unexpected happened. For example, even if your employer plan offers disability or critical illness coverage, the benefit might not fully support your household if you couldn’t work.

Tools such as RBC Insurance’s disability insurance calculator and critical illness insurance calculator can help estimate how much coverage you may need based on your income and expenses. You can use these figures to compare what you actually need against your employer’s group plan, if you have one.

Consider life stage

Your insurance needs often change over time. Someone who’s single and in their 20s likely needs different coverage than someone raising kids or planning for retirement.

Think about your age and stage. Do you have dependants to care for? Are you retired and on a fixed income? Would your savings cover daily expenses for six months or longer if you became ill or injured?

Answering these questions can help you ballpark what type and how much coverage you might need.

Compare coverage options and costs

Not all plans are created equal. Before you commit to a policy, compare what each one covers, how much it costs, and any limits that apply. Pay close attention to details such as exclusions, waiting periods, and deductibles so you understand exactly what the policy includes.

For example, RBC Insurance offers a variety of disability insurance options catered to your profession, from tradespeople to small business owners, so you can ensure your coverage covers what you need while still being affordable. You can get a Disability Insurance Quote immediately online by answering just a few quick questions about your age and income.

Travel insurance is another example of coverage with a variety of options. These plans vary depending on your age and how long you’ll be away. There are also multi-trip annual plans. You can get a Travel Insurance Quote quickly online based on the type of trip you’re planning.

Work with an advisor

If you’re still unsure what level of insurance is right for you, consider speaking to a licensed RBC Insurance advisor. They can help you review your options, answer questions about coverage, and find a policy that fits your budget and needs.

The bottom line

Health issues can be unpredictable, but preparing for them doesn’t have to be. Understanding the different types of health insurance available can help you make thoughtful decisions about protecting both your health and your wallet.

The right coverage will look different for everyone. What matters most is knowing your options, reviewing the coverage you already have, and choosing protection that fits your life today — and where you’re headed next.

If you’re ready to get started, an RBC Insurance advisor can help you explore your options and find coverage that fits your needs.