(Part two in a series by John Moakler, click here for part one)

In this three-part series, John Moakler looks at the concept of putting bumper guards around doctors’ financial plans. Today, in the second post of the series, he looks at something only 5% of Canadians are insured against but the majority will get: a critical illness.

As of 2020, it is estimated that 50% of Canadians will be diagnosed with cancer in their lifetime. Eighty-five percent worry about getting a critical illness, and 58% say they would be in financial trouble if they got one.

The financial hardship brought about by an uninsured critical illness is very real. For example, 25% of all mortgage foreclosures in this country are due to a critical illness that render a breadwinner unable to keep up with payments.

And yet, only 5% of Canadians have a critical illness (CI) policy.

Ever heard of Doctor Marius Bernard? More than 30 years ago, as a medical doctor in South Africa, Dr. Bernard noticed a change: whereas formerly, people who received a critical illness diagnosis usually died, now they were starting to live for at least a while, due to medical advancements. And because they were living for a while, their inability to earn an income meant they were being wiped out financially.

So Dr. Bernard took it upon himself to work with an insurance company to create critical illness insurance. Critical illness insurance is a type of insurance policy that pays out a lump sum once you have been diagnosed with one of the covered conditions and you have survived for at least 30 days since the diagnosis. A policy will cover a variety of major illnesses, such as heart attack, stroke, life-threatening cancer, Alzheimer’s, multiple sclerosis, Parkinson’s, and occupational HIV; the list includes at least 25 illnesses.

We design it as a guaranteed plan: either you are going to get a critical illness and receive the benefit, or, if you don’t get a critical illness, you can have 100% of your premiums back…tax-free.

In most cases, we recommend a CI strategy called “split dollar,” in which part of the premium is paid by the doctor personally, and part by their corporation. The upshot is that upon expiration of the policy, provided there has not been a claim, you get 100% of the premiums that were paid (both by the corporation and by you personally) back to you personally – tax-free. This is a great strategy for getting money out of the corporation.

Who is John Moakler?

John Moakler is a nationally recognized financial planner specializing in financial health care for medical professionals. He rigorously diagnoses your financial condition and then prescribes a customized, written Financial Treatment Plan. If you’re a dentist or doctor and want to learn more – or get started on a plan just for you – contact John today.

John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
1 416 840 8544