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Financial Fixes: From Health Scare to Financial Care

Financial Fixes: From Health Scare to Financial Care

January 03, 2020

Have you or a loved one ever had a major health scare? One that rocked your world for a few days (and sleepless nights) until you learned it was not as serious as you feared and that life would return to normal with the right care.

A medical “what if” crisis can be a five-alarm wake-up call to better manage your physical health. But what about your financial health? Are your finances robust enough to tide you over during a serious illness—or do they need some loving care as well?

Consider the following numbers. (Warning: They may make you sick.)

Over 60 percent of U.S. bankruptcies are linked to medical issues, resulting from either the high cost of care or lost pay from being out of work.1 Health insurance seldom covers everything, and only 40 percent of Americans have sufficient savings to cover an unexpected $1000 medical bill.2 (These days, $1000 may not even cover a trip to the ER, let alone a major illness.)

In addition to buying the best health insurance you can afford, let’s examine what other proactive prescriptions can help protect your financial well-being.


Four out of five U.S. workers live paycheck to paycheck, and any gap in income can be financially devastating.3 If you become too ill or injured to work, disability income insurance provides a supplemental income, so you can focus on your recovery instead of worrying about your finances. Have disability coverage through your employer? Great, but most employer plans only cover 40 to 60 percent of your income, so look into a supplemental plan as well.


Are you procrastinating on your rainy-day fund, or contributing only half-heartedly? Let’s add some urgency by calling it what it really is: a financial fire-extinguisher. Emergency savings can help you put out the financial flames that threaten your home and other assets in the event of unexpected medical bills. Ideally, your savings should equal a year of your income—but the important thing is to start contributing consistently.


“Wait,” you say, “I thought it was just a scare, not the real thing!” The thing is, whole life insurance can offer the protection of a death benefit, and more. Certain plans build cash value4, a living benefit that can be used to cover mortgage payments or other bills in the event of an unexpected income gap5.


Prepare for the worst but go with the odds: many of us are likely to live well into our golden years. To make sure they’re golden, set up a long-term savings account and let it grow untouched as long as possible as part of your retirement planning. The advantage of compounding can generate an impressive sum for later, when you retire healthy and ready to enjoy life. Also, consider setting up and contributing the max to a health savings account (HSA) if you’re eligible. The balance carries over year after year, and can provide a tax-advantaged way to pay healthcare bills in retirement.

Clearly, the right coverage can help you weather bad health-related news. For more advice on planning for various “what ifs”—good and bad—in life, talk with your financial professional.


2019-80563 Exp 06/2021

Brought to you by The Guardian Network © 2019. The Guardian Life Insurance Company of America®, New York, NY.


[1] This is the Real Reason Most Americans Fil For Bankruptcy, CNBC, 11 February, 2019

[2] How To Build A Cash Cusion When Your Income Is Cut Off, CNBC, 8 February, 2019

[3] Shutdown Highlights that 4-in-5 US Workers Live Paycheck To Paycheck, CNBC, 09 January 2019

4 Some whole life polices do not have cash values in the first two years.  Talk to your financial representative and refer to your individual whole life policy illustration for more information.

5 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.