Your Health is Your Wealth?
“You can have all the money in the world,” my mother used to say, “but without your health, it’s not worth anything.” Most of us would agree with the old adage that ‘your health is your wealth’, but recent research seems to prove the reverse, that your wealth is your health.
By Ken Stollon
There are many dimensions to what is referred to as the ‘health-wealth gradient’. Scientific studies, carried out over several decades, point to a direct correlation between wealth and health. For example, in the U.S., men with family incomes in the top 5% live 25% longer than those in the bottom 5%. Simply put: wealthy individuals live longer, healthier lives.
Contrary to my mother’s wisdom, then, ‘all the money in the world’ might be just what the doctor ordered! A strong financial base lowers stress levels, thereby reducing major causes of illness. Of course, wealthier individuals also have better access to health care, and the resources to pay for more timely treatments and care which may be more readily available outside Canada, or for new, experimental drugs that may not be covered by the provincial health care system.
Many Canadians are unaware of the ‘soft’ expenses associated with a serious illness or disability. These could include travel expenses to obtain treatment, or modifications and/or renovations to a home or vehicle, such as building ramps, widening doorways, or lowering cabinets to facilitate wheelchair access.
Illness, disability and medical expenses are cited as the number one cause of bankruptcy. According to a Harvard research study, medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007.
In both Canada and the U.S, medical problems, including illness or injury, are also a leading cause of mortgage foreclosures. In Canada, cashing out of RRSPs is a common strategy for dealing with an extended illness, and not a very effective one: $1 from RRSPs may yield only 50 cents, after taxes.
What to do?
Most financial advisors recommend setting up an emergency or ‘rainy day’ fund, consisting of three months’ income – invested in a balanced portfolio, but liquid and accessible. In addition, particularly for individuals who are not super-wealthy, many insurance products are available to help mitigate the financial risks of illness or injury. Health insurance is referred to as a ‘living benefit’ because, unlike life insurance, the insured person is alive and receiving the benefit.
There are four types of health insurance, all with a common purpose: to make sure your finances don’t suffer when your health does!
Depending on your age and level of need, a financial advisor can recommend the right health insurance for you. The four types are: critical illness insurance, which pays a lump sum benefit if you are diagnosed with one of 24 covered illness and conditions, including cancer, heart attack, stroke, multiple sclerosis, loss of limbs and paralysis; disability insurance, which pays a monthly benefit if you are unable to work due to illness or injury; long-term care insurance, which pays an income benefit if you are unable to care for yourself; and personal health insurance, which will partially reimburse medical and dental expenses not covered by the provincial health care plan.
Some or all of these four health insurance types may be part of your employee group benefits plan. A financial advisor can assess your group plan and recommend the right mix of complementary personal benefits. If you are self-employed, you should take an even closer look at what these health insurance plans can do for you.
The bottom line is that a solid financial plan, which includes a disciplined savings program and a customized health insurance portfolio, will reduce stress, give you peace of mind, and just might make you healthier and live longer!
Ken Stollon, MBA CFP CLU RHU, manager of Sun Life Financial Markham Financial Centre, is a Certified Financial Planner with 19 years’ experience. Tel: 905-294-4030 x 2102; email: kenneth.j.stollon@sunlife.com
2600 John Street, Unit 207, Markham, ON L3R 3W3 T: 905.475.5222 F: 905.475.6369
