Are You Financially Prepared For Bad Health?

By Kevin Press, BrighterLife.ca

Are You Financially Prepared For Bad Health - Steinman Financial  NetworkA couple of weeks back, my very talented research team released a study called the Sun Life Canadian Health Index. Now in its second year, its mandate is to measure what Canadians think about a variety of lifestyle choices related to health, and how their actual behaviours line up against their intentions. There are so many things that get in-between what we want to do for our health and what we can actually bring ourselves to do. Given the important links between health and personal finance, these barriers can have significant consequences.

One example: While 53% of Canadians believe that a major health condition would have a “big, perhaps permanent impact” on their personal finances, just 58% of Canadians are preparing or are prepared in case they get sick. And just 8% of Canadians told us they have a written financial plan that covers health-related issues such as insurance and risk management.

This is worrying. The need to prepare for a serious health event should be part of every financial plan. Talk to your advisor about disability insurance, critical illness insurance, long-term care insurance and personal health insurance. (A bit of obvious disclosure here; Sun Life Financial is in this business. You can find a summary of these products and how they work at sunlife.ca.)

But what these national numbers miss is that people think about health differently. Views can be driven by age or circumstance. Very often they’re informed by an existing health condition. Our research has surfaced a better way to look at Canadian opinions by organizing them into five categories:

    1. The Overconfident are younger, and more likely to be male. They view their health as strong, but that is not to say that they’re making healthy behaviour choices. Even though they could, they’re not prepared to start living a more healthy life. This group is estimated to make up 26% of the adult Canadian population.

 

    1. The Health Strivers are typically middle-aged or older and they’re more likely to be female. They’ve taken responsibility for their health, they’re making good choices and they report above-average health. One-quarter of Canadians are in this group.

 

    1. The Overextended are in the early- to middle-stage of their career, for the most part. This group is more likely to be male. Regardless of whether they want to make good health choices or not, they face too many competing priorities for their time and energy to do much about it. This represents 19% of the population.

 

    1. The Resilient are older and more likely to be female. As much as they place a high value on a healthy lifestyle, they face a pre-existing health condition. Obviously that has a negative impact on just how healthy a life they can lead. This is 17% of Canadians.

 

  1. The Inhibited are younger and more likely to be female. Many of these folks struggle with stress, and they lack sufficient self-confidence to join a gym for example. With the right support system, these Canadians are willing to work on a healthier lifestyle. But presently, they report feeling marginally less healthy than the average. A remarkable 12% of Canadians are in this group.

Broken down into these segments, the results provide added insight.

Among the Overconfident, 53% believe a major health condition would have a big, perhaps permanent impact on their personal finances. Six in 10 are preparing or are prepared for a serious illness. And 6% have a written financial plan that covers health-related issues such as insurance and risk management.

Among the Health Strivers, the results are 39%, 75% and 15% respectively. The Overextended scored: 63%, 41% and 3%. The Resilient scored: 50%, 57% and 8%. The Inhibited scored: 66%, 47% and 5%.

The Health Achievers are significantly less likely – relative to the national average – to believe that a major health issue would have a big, perhaps permanent impact (39% vs. 53%). They’re more likely to say they’re prepared (75% vs. 58%) and that they have a written financial plan that covers health-related issues such as insurance and risk management (15% vs. 8%).

On the other hand, the Inhibited and the Overextended are more likely to believe a health issue would have a big, perhaps permanent impact (66% and 63% respectively). They’re less likely to be prepared (47% and 41%) and to have a written financial plan that covers health-related issues such as insurance and risk management (5% and 3%).

Know anybody that falls into either of these two categories? A bit of friendly advice might not be out of order.

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