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The Globe and Mail

You can't budget for cancer: how illnesses damage family finances

For Kathy, the breast cancer diagnosis came the night before she and her husband were set to break ground on construction of their new home.

It wasn't until five months into her treatment that they realized the impact on their finances, given the additional expenses on the self-employed couple's new home and her diagnosis.

"The pressure and the extra unplanned stress was definitely there, but it was all the timing," said Kathy, who asked only her first name be used. "You can't plan for cancer."

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Making financial plans for unexpected, serious health issues is key, say financial advisers. Access to an emergency fund, even if it's through a secured line of credit, can help make ends meet.

"If you can find the time to sit down with your adviser, they'll look at your current cash flow situation, they'll look at how much money you've got set aside and also look at the bigger picture as well," said Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth Management.

"It's very important at the very beginning, sometimes before treatment starts, that you can get a handle on your financial resources so it doesn't stress you out further."

If a cash reserve is not an option, advisers suggest a line of credit secured by your home, as they offer the lowest interest rates.

Golombek advises against using funds in an RRSP since withdrawals are taxable, but he still places that option above credit cards, which have the highest interest rates of all.

Certain expenses associated with treatment, such as travel for specialized treatment, may also be eligible for a tax credit. Eligible costs are listed on the Canada Revenue Agency's website.

Kevin Dougherty, president of Sun Life Financial Canada, said 69 per cent of the major health event claims his company sees are for cancer, compared to, for example, 11 per cent for heart attacks.

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Breast cancer itself affects one in nine Canadian women, with an estimated 23,800 women and 200 men expected to be diagnosed this year alone, according to the Canadian Breast Cancer Foundation.

Group and individual health insurance plans will help if a person has to take time off work for themselves or to care for their spouse.

Critical illness insurance also pays out a lump sum that "gives you flexibility to do a lot of things you need to do while you're fighting this health event, whether it's child care or home care, your spouse taking time off work," Dougherty said.

"But the other thing it does is it protects your retirement savings."

While Kathy, 38, and her husband had savings and real estate investments to fall back on, they didn't have a drug plan or life insurance. Many of Kathy's medications and procedures were considered non-traditional and not covered by the provincial health plan.

The couple got by on those savings and the sale of a property, but Kathy said she wished she would have purchased insurance long before her diagnosis.

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