FINANCIAL CONSEQUENCES OF INJURY

On June 3, 2017 I had an accident that had profound effects on my lifestyle. This blog recounts my road to recovery.
As an insurance advisor, I talk to clients everyday about the financial consequences of life events – ie death, sickness, injury. These are things that none of us (including myself) like to think about happening to us. Sickness, accident, death – they’re all things that happen to ‘other’ people. We are inundated with examples daily via TV, social Media, news, etc of tragic events in peoples lives. But these are ‘other’ people.
On June 3, 2017 I became a statistic. The statistic is that one in three Canadians will suffer a disability lasting more than 90 days (average disability lasts 30 months). While I have many different types of insurance coverage on myself and my family (life insurance, Critical Illness Insurance, Disability Insurance and Travel Insurance) I never expected to be claiming on a Disability Insurance policy. While I am active (run, love the outdoors, etc) I am not particularly adventurous and I tend to be fairly cautious.
I discuss many situations and ‘what if’ scenarios with clients all day and often in my mind as I’m having these conversations I think – “Listen to yourself. Take your own advice”. The one thing that always resonates with me is – some things in life are controllable (we take precautions to avoid injury and sickness) but no matter how cautious we are, many things are beyond our control – ie. Accidents.
My situation and injury had many perils. Everyone’s situation is unique as we all have different family and financial circumstances. Regardless of circumstances, there are financial consequences of sickness and injury. Regardless of our financial circumstances (rich, middle class, less affluent), our biggest asset is our health. Without our health, (whether due to sickness or injury), the inability to work, impacts our ability to generate income to sustain our lifestyle and pay the bills.
In my situation, I fell through the attic ceiling while at my mother’s home in North Carolina. I was visiting her from Vancouver, BC, Canada. It was approximately a 12’ fall, unabated. Happened in a split second. My right ankle was crushed (bones and blood everywhere). The accident and injury could have been worse – Could have hit/hurt my head, could have injured my back/spine, the possibilities are endless. The injury required paramedic care, ambulance to local hospital, surgical care, hospitalization, all out of country. American health care while great, is not cheap. These bills (which are significant) are entirely my responsibility.
My recovery period is not short. Initial prognosis, post surgery would be 3 months of no weight on my right ankle/leg and then a prolonged period (close a year in all likelihood) of rehab and physiotherapy. Given it was my right ankle/foot that was injured, I would not be able to drive for this period, hence losing much of my independence in the process.
The financial consequences were both immediate, short term and long term. There was the issue of paying for my health care while in the US, paying for flights, etc for my trip home. Once home, there would be the issue of costs for medical expenses not covered by MSP and public health care, and loss of income due to not being able to work while recovering. I am a self-employed insurance advisor with no employer or public benefits (outside of public health care/MSP). Not being able to drive = not being able to work = no income. For a minimum of 4 months, and in all likelihood longer.

There are many sources to cover short term and long term costs of income replacement due to sickness or injury. We can use personal savings (if we have some – most Canadians have less than 30 days living expenses saved), we can use personal retirement savings (employer retirement savings are not accessible.), we can get support/help from family (works only if you have availability to family who have financial resources or live nearby and have time to provide physical support), we can leverage loans/lines of credit (only if these are already approved – banks don’t lend money to people who aren’t working), there may be some public support services available (in Canada, these are very few, usually covering only permanent disability, are hard to qualify for and take a long time to be approved) and lastly, insurance.
I hear many or these reasons from clients during my insurance planning conversations. The root of looking for alternate sources of funding disability and health costs is – no one likes to think they will get sick or suffer a prolonged injury. These are not pleasant thoughts. Ignoring them however, doesn’t change the risk of them happening. Ostrich syndrome I call it (burying our head in the sand).
We travel a lot to the US as we have a trailer down in Washington State that we go to most weekends in the summer, and often in the winter. These may be short trips (usually only a couple of days) but we often will take a week or two for camping vacations in the US with our trailer. I also have family (mother and sister’s family) in the US. For these reasons, I’ve always carried out of country travel insurance. Getting sick or injured in the US and the corresponding costs would cripple us financially. The number one reason for bankruptcy in the US is medical expenses.
My out of country travel insurance covers all my out of country costs – doctor, nursing, hospital, ambulance, medication, X-rays, medical devices (ie. Crutches), as well as costs to come home. In my case, my mother lives an hour and half from the nearest airport. As I had ankle injury requiring my ankle to be in splint, elevated and immobilized, I was flown home first class to give me appropriate leg room. Costs of securing a limo driver to take me to the airport and ensure I had wheelchair support at the airport was also provided for both ends of the trip.
This may sound like a platitude, however, I must say as I was in the ambulance travelling to the hospital I had a sense of calm knowing I did not need to worry about my medical expenses as I had out of country coverage. When you’re injured and sustained a major trauma, your mind races a million miles an hour, going to a million different places. There is significant anxiety and worry. Not having financial worries was one less thing. It allowed me to focus on my physical well-being and resolving my medical injuries. I could focus on me.
Once home, there are a whole different set of concerns and priorities. My health and well-being were always foremost but the nature and prolonged recovery added to the anxiety and stress, compounded by the lack of independence. I am focusing here on the financial aspects as previous blogs have touched on various physical and emotional challenges.
My wife works full time in an administrative capacity so generates income to support our household expenses and lifestyle. It would be challenge to rely solely on her income. As I said previously, I am self-employed with no benefits. I do however have 3 different disability policies. I took each of them out for different reasons to help in different situations. With my current situation, I was eligible for a claim on all 3 policies. Each would pay out different amounts at different points in time. The amount is sufficient to cover our household expenses (like mortgage, property taxes, etc) but combined, they do not pay out anywhere near what I would generate working full time.
My injuries would significantly impact mine and our lifestyle and activities, so we have had to moderate our expenses and activities as well. Not worrying about paying the mortgage and for food, however is a big relief. Particularly in light of the fact that I found out July 27, 2017 that I would require a second surgery to fuse my ankle which would push out/delay my recovery by at least 4 months.. That means a minimum of 7 months of no income and in all likelihood, longer.
It’s very different being a claimant on an insurance policy than the advisor selling the plan. When talking to clients I often am asked, ‘But will it pay out? I hear insurance companies don’t pay out’. The reality of life and health insurance plans is the vast majority of these plans do pay out. Approx. 98% of life insurance policies pay out, approx.. 93% of Critical Illness policies pay out and approx. 82% of Disability policies payout. Claims on disability policies also tend to cause the most frustration for claimants.
Claiming on any insurance policy requires medical proof/evidence. The easiest to claim on is life insurance. We only die once. There’s no subjectivity – you have a pulse or your don’t. So life insurance policies have high payout rates and are paid out quickly. Critical Illness policies typically cover major illnesses such as Cancer, Heart Attacks, Stoke, to name but a few (and the most common reasons for claims). Critical Illness policies outline what is covered and the process for claims. Again, they must be supported with medical reports from doctors and specialist to validate the illness. Both Life insurance and Critical Illness policies (in most cases – unless there is a second condition payment rider on the policy) only pay out once, hence the process is relatively quick.
Disability Insurance however, because it pays out an income stream monthly and will payout for each incident of not being able to work, are more complex. As with Life and Critical Illness insurance, the medical information must be verified and substantiate by your doctors and specialists. The difference however, is the nature of the injury/sickness must be such/severe enough that you are unable to work for a prolonged period of time (minimum of 30 days, possibly longer, depending on how the policy is structured). Discomfort or pain, doesn’t necessarily qualify for disability payouts. The actual disability policy will outline the terms required for a payout.
This larger source of interpretation causes a lot of misunderstanding when claiming on Disability policies. The other factor is to think about what’s happening/circumstances when you’re filing a disability claim.. You’re sick or have suffered an injury, you’re not yourself, you’re under financial stress due to loss of income, you’re not feeling well/feel stressed from the pain and medications, you’re not able to contribute or perform your normal functions. These all create significant anxiety and stress – on yourself and your family. Layer on top the insurance company requirements..

I found dealing with 3 different insurance companies, ‘interesting’. I knew there would be medical information required, forms to complete, etc. They were all different in some respects. Some were more responsive and quicker. I was quick to request the information and to provide the information both electronically and via mail, as the assessment and approval process would take time. The sooner the insurance company obtains the required information, the quicker I would receive payment.
Many people think that household expenses and lifestyle expenses will be less in the event of disability. This is not necessarily true. Certain expenses such as mortgage/rent, utilities, loans, cell phones, TV, food don’t go away. We can make adjustments to savings plans or secondary payments while not working, but there is not as much flexibility as one would think. In our case we don’t go to our trailer much (for one reason, my enjoyment because of mobility limitations isn’t the same). My business expenses are less as I’m not seeing clients.
The big misperception however is your health and medical expenses are covered. Many are not. In BC, some expenses not covered include: ambulances, ambulatory devices like crutches and walkers, casts. You will require doctors visits, often at hospitals – most require hourly parking which rates are not cheap. Often food/coffee will be consumed during hospital visits. Depending on your medical plans with work (if you have coverage) there will be pharmaceutical expenses. Depending on what’s required, the costs can be significant. Cancer medications will run in the thousands of dollars per month often. If there’s prolonged hospitalization, may require additional hospital room costs (ie TV, semi-private room, etc). Your family situation if you have children may also increase child care expenses to look after children during hospital and doctor visits. Generally, being sick or injured will add to your monthly expenses.
Anticipating injury or sickness and planning for it accordingly will help alleviate financial stress during tremendous physical and emotional stress associated with your health condition. Planning in advance will help alleviate the stress. Good things happen to good people all the time.