Health and Personal Finance: Planning for the Unplannable
When Life Hits Harder Than Expected
At age 25, I was diagnosed with chronic kidney disease. Three decades later, I started peritoneal dialysis, followed by a kidney transplant from a living donor at age 57. In between, I underwent surgeries for my gall bladder (2007) and prostate cancer (2009). These major medical decisions intersected with every financial plan I ever made. You can read a little more about my journey with kidney disease and personal finance here.
Illness is not rare, and it doesn’t always arrive later in life, “in retirement.” Some of the most financially disruptive health events occur during a person’s school or working years. My mother had rheumatoid arthritis from her early 30s. A cousin has lived with it since early childhood. A work colleague died of brain cancer in his 50s. A young boy in our church is going to die of brain cancer.
I could go on. But this post isn’t about evoking pity or fear. It’s about acknowledging that health and personal finance are tightly interwoven, and that wise planning can soften the blow when life throws something at you that you didn’t choose.
Health Shocks and Their Financial Consequences
The Financial Fallout of a Serious Diagnosis
Even in Canada, with universal health care, a serious illness can be financially destabilizing.
Among the impacts are:
- A loss of earned income during treatment or recovery.
- Increased spending on medications, travel to specialists, complementary therapies,* home adjustments, etc.
- Disruption to long-term savings plans, especially RRSP and TFSA contributions.
- Additional caregiving costs or strain if you’re caring for someone else.
The Ripple Effect on Life Goals
You may have had plans to buy a home, return to school, or retire early. A serious illness could delay such goals or eliminate such prospects altogether.
The London Health Sciences Centre is home to the major centre for people living with kidney disease in southwestern Ontario. People who live in more rural areas outside of London, sometimes hours away, need to travel to London to see a specialist. Circumstances may require an overnight stay at a hotel. Although there are supports available, there are costs to being away. One ripple effect might mean relocating so that health care is more immediately accessible. Another might be an unwillingness to relocate because the necessary health care would be too far away.
Spouses, partners, parents, children, siblings —all may be affected, especially if they take time off to care for you.
Emotional and Behavioural Challenges
The effects of illness are not just financial. Whether you are the patient or the caregiver, the unrelenting stress takes a toll. Financial decisions are rarely ideal when made in crisis.
Sometimes it feels impossible to make any decision at all; other times, unwise or harmful decisions are made under pressure. This is where advance planning matters. When you’re fighting for your life, you often don’t have the energy to plan.
Insurance Planning: Managing Risk Before It Manages You
Disability Insurance
This is one of the most important and underappreciated forms of insurance. Because I was diagnosed with kidney disease early in my adult life, I was never eligible to purchase this kind of coverage privately. Thankfully, my employer from 2005 to 2019 offered a group policy. I opted for the maximum coverage, which became especially valuable during the two years I was on dialysis and recovering from transplant surgery.
Disability insurance covers a portion of your income if you become unable to work due to illness or injury. Group plans may offer coverage, but often with limitations, such as a two-year “own occupation” definition. Coverage usually ends at age 65, though some private plans extend beyond.
If you are self-employed, a private policy is essential despite the cost. Many Canadians prioritize life insurance, but the probability of experiencing a disability is significant. According to the U.S. Social Security Administration, as cited by Guardian Life, “one in four 20-year-olds will experience a disability for 90 days or more before they reach age 67.”
Critical Illness Insurance (CII)
I’ve never had Critical Illness insurance. To my knowledge, it wasn’t an available option in earlier years and was not included among the group benefits that I could sign up for. CII pays a lump sum upon diagnosis of a covered illness. The classic “Big 3” are cancer, stroke, and heart attack, but up to 26 illnesses may be covered.
CII is not a substitute for disability insurance, but it can provide a financial buffer—to reduce debt, fund travel for treatment, or allow a spouse to take time off. It may also fund a bucket-list trip.
It makes sense for self-employed individuals, stay-at-home parents, or anyone lacking a full emergency fund. A monthly premium may be more manageable than setting aside months of savings.
It’s also worth considering if your family has a history of serious illness. On the other hand, if you already have strong coverage and savings, CII may be a nice-to-have rather than a must.
Life Insurance
Life insurance is essential for income replacement, especially for young families. Over time, as children grow and the mortgage is paid off, your human capital is replaced by financial capital in RRSPs, TFSAs, pensions, and other assets. For most households, term insurance is sufficient.
Permanent life insurance can still be useful, especially for estate planning, charitable giving, or caring for dependents with special needs.
Should you insure your child’s life? Generally, no. A child’s death, while devastating, doesn’t usually cause a long-term financial loss. However, permanent policies with guaranteed insurability can allow your child to maintain coverage into adulthood—as was the case with one of my clients.
Some parents may also opt for a small policy to cover funeral expenses and allow time to grieve.
Extended Health and Health Spending Accounts (HSAs)
Provincial health plans don’t cover everything—notably, prescription drugs, dental, vision, and paramedical services. When I was being evaluated for a kidney transplant, I was asked to confirm insurance coverage of the prescription anti-rejection medications I would need to maintain my donor kidney’s health within my body.
HSAs, often employer-funded, reimburse employees for eligible, tax-free health expenses that may not be fully covered by extended health plans. These can include prescription drugs, dental or vision care, or services like physiotherapy and massage.
Some HSAs also allow for taxable benefits under what may be called a Wellness Account, covering items like gym memberships or athletic wear. Employers vary in how strict they are with these categories.
How to Evaluate What’s Right for You
There is almost no end to the types of insurance that you can purchase. Some unscrupulous agents can raise the spectre of all kinds of disasters to exploit our fears. The goal of insurance, however, isn’t to eliminate all risk; it’s to prevent the financial ruin that could otherwise result.
Life Planning: The Health-Wealth Connection
Lifestyle choices that support long-term health and financial stability
Beyond insurance, your everyday choices matter. After my transplant, I was diagnosed with Type 2 Diabetes, partly due to the anti-rejection medication I take. I’m now in a program aimed at controlling or reversing diabetes through basic lifestyle changes: better nutrition, sleep, exercise, and stress management.
These choices affect not just health, but also productivity and income over the long term.
Burnout and chronic stress are major threats to both our financial and physical health. If you’re struggling, consider if there are opportunities for preventive sabbaticals, setting boundaries, or even changing jobs.
Building a Life that can Bend without Breaking
Maintain career flexibility. Avoid being trapped by “golden handcuffs” like pensions that tie you to an unfulfilling job. While pensions are valuable, having your own retirement assets—RRSPs and TFSAs—adds freedom.
Live below your means. Not for frugality’s sake, but for resilience. It allows you to build an emergency fund and consider jobs with lower pay but better work-life balance.
Several years ago, my wife accepted a half-year contract in Japan. She had to resign to do it. I took a leave of absence and used the time to work toward my financial planning designation. We had no guarantee she’d be rehired, but our financial situation gave us the confidence to move forward with this rare opportunity.
Financial independence isn’t just about retiring early. It’s about having choices, especially when life forces your hand.
Advance Preparation Matters
Create an emergency fund. Save 3–6 months of core household living expenses; if you are self-employed or have irregular income, save more.
Set up a Power of Attorney. The language differs somewhat depending on the province or territory where you reside. The purpose is for someone to manage your financial affairs if you are unavailable or incapable of managing these matters on your own.
Set up a Health Care Directive. The terminology also differs according to jurisdiction. This document allows someone to make care decisions for you when you cannot.
These documents aren’t just for the elderly. They’re crucial for anyone, especially those who are single or unattached.
And one more thing: keep your family informed, especially if you have specific instructions that may not be widely known.
A Life Well-Planned, Not Just Well-Financed
Some final thoughts from me. Planning for poor health is not pessimism; it’s wisdom. You cannot prevent every hardship, but you can soften the landing. I invite you to reflect on your preparedness, not with fear, but with an honest review of your situation.
*Complementary therapies include massage therapy, acupuncture, counselling, spiritual direction, etc., to manage pain, fatigue, nausea, stress, or anxiety during or after treatment.
This is the 293rd blog post for Russ Writes, first published on 2025-06-23.
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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.