When building a house, you always start with a solid foundation. It makes sense to do the same when building a financial plan. We can’t always predict or prevent difficulties in our lives, but we can still plan for some of the unknowns. When building a financial plan, it is important to first take care of the “non-controllable events.”
You can take steps towards having good health or a long life, but you’re never completely in control. Most people have recognized the value of life insurance. It’s just as important to recognize the value of health insurance.
If you or one of your children became seriously ill, what would happen? How would your cope? What would happen to your finances? According to the 2013 Sun Life Canadian Health Index, 40 per cent of Canadians faced financial hardship after a serious health event and financed their health crisis in the following ways:
- 22% turned to credit cards or personal lines of credit;
- 22% accessed personal savings;
- 12% borrowed from a loved one; and
- 5% were forced to either remortgage or sell their homes.
You may assume that you’re adequately covered by the government or through your employer. However, here are a few questions to consider:
- If you have disability insurance coverage, what portion of your pre-disability income would be replaced if you were unable to work?
- What if you’re self-employed? How would you replace lost income?
- How would you pay for necessary care beyond what the government provides?
- If you leave your job or retire, what coverage do you have in case you become ill and need care?
What can you do to protect yourself?
More health insurance solutions are now available to complement traditional insurance benefits and protect against a wide variety of risks.
Personal health insurance can fill gaps for individuals who don’t have coverage through their place of employment, or for small business owners. Expenses such as dentistry, prescription drugs, medical equipment and in-home nursing can add up very quickly. That’s where personal health insurance can help.
Critical illness insurance offers help paying costs associated with life-altering illnesses. If you become sick with an illness covered by your policy and survive the waiting period, you receive a tax free, lump-sum cash payment – you decide how to spend the money. The benefit can alleviate financial worries, so you can concentrate on recovery.
Disability insurance can help to protect your pre-disability income over a period of years or decades should you become ill and unable to work. You can protect approximately 70-80% of your income by redirecting 2-3% of it towards this type of coverage.
Health insurance and risk management
Risk management is an important part of your overall financial plan. Exploring the various strategies and options that make sense for your unique situation and goals is easier and less time consuming than you may think. For the time commitment comparable to watching a movie, you can have a holistic review. Then you can be assured that your plan is built on a solid foundation of informed decisions.
PROVIDED BY: Stephen Boyle, an Ashbury College graduate and a Sun Life Financial Advisor. Steve’s passion is helping others with their financial planning needs. Stephen understands that people work hard for their money and looks for opportunities to get their money working hard for them. For financial advice, contact Stephen at firstname.lastname@example.org or visit him at LinkedIn page or Sun Life Financial