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Column: Health scares and peace of mind

Soon, we will gather with loved ones around the dinner table before enjoying a delicious turkey feast, while creating new memories and reflecting on our good fortunes.
It is important to protect your finances against a health crisis.
Soon, we will gather with loved ones around the dinner table before enjoying a delicious turkey feast, while creating new memories and reflecting on our good fortunes.

So, what are you thankful for?

I’m most recently thankful for my health and the fact that I had taken steps to protect my finances against an illness long before my doctor scheduled a biopsy.

My recent health scare has determined this edition’s topic of choice. Below, I explain the differences between the insurance options most commonly available when it comes to protecting your finances against a health crisis.

Critical Illness Insurance

Critical illness insurance (CII) is a relatively new form of protection in the insurance industry. Simply put, CII provides a lump sum payment in the event of a diagnosis of a covered illness listed in your policy booklet.

Companies offering CII may provide varying types of coverage. However, the most commonly covered illnesses are cancer, heart attack and stroke.

CII provides a single cash benefit of a pre-determined amount upon claim approval. Most CII plans are not reimbursement plans and you may use the cash benefit however you like.

Long-Term Care Insurance

Unlike CII’s onetime cash benefit, Long-Term Care Insurance (LTCI) provides regular ongoing payments upon claim approval.

However, to be claim eligible, an attending physician must verify that you are unable to perform some of the Activities of Daily Living (ADL). ADLs are commonly referred to within the health-care industry when describing a person’s abilities.

In short, LTCI provides ongoing payments when a person is unable to perform a set number of ADLs regardless of whether the inability was caused by illness or injury.

Each company’s LTCI product varies, depending on, but not limited to, the number of ADLs required to be claim eligible, cash versus reimbursement payments and the length of benefit period elected.

Personal Health Insurance

Personal health insurance (PHI) provides coverage for prescription drugs, vision, dental and extended health-care provider benefits.

As a PHI plan member, you may be required to pay expenses up front, then submit receipts to your carrier for reimbursement. Or, your insurance carrier may have provided you with a wallet card to act as proof of coverage, permitting the insurance carrier to be billed directly for payment.

PHI is a common benefit provided by employers for their valued employees. However, it is also available for purchase by an individual through the many insurance companies available.

Disability Insurance

In addition to PHI, Disability Insurance (DI) is also a common benefit provided by many employers.

DI protects your income up to a pre-determined amount and provides a regular income stream in the event you are unable to work due to a disability.

DI is an important type of plan as it provides an income to help pay bills while you take time to recover before returning to work.

In summary, there are several types of insurance available to protect your finances against an unexpected health issue. Often times, there are gaps to fill depending on what your employer and government benefits already provide.

Therefore it’s important to do your research with a trusted financial adviser to determine if your finances are protected should you be faced with a health crisis.

Plan for the worst and have peace of mind while you continue down the path of a balanced, healthy lifestyle.

Heather Tarnopolsky is a Sun Life Financial adviser in Greater Sudbury.