Insurance vs Emergency Fund

Q & A

I have extended health through my benefits at work. I am deducted 29.10 biweekly. I thought this was a good deal and then I figured out the yearly amount is over $700. Is it worth it to sock that away for emergency rather than pay it? Last year we only used the equivalent of $400 for dental and that is all.

Name withheld

Congratulations on your good health. This year, I've already spent close to $2,500 on dental and eyes for my fam. And I don't have the benefit of insurance, so I'm out of pocket that total, though I can claim it on my taxes.

When you buy insurance, you are buying piece of mind and the protection of your cash flow. While it may be tempting to pull the money away from the insurance for other purposes, the question you have to ask yourself is this: If the ca-ca really hit the fan and you were faced with a whopper of a bill, would you be able to manage it easily?

According to Statistics Canada, the average Canadian family spent $1190 on health care in 1998, $1260 in 1999, and $1360 in 2000. Haven't seen the most recent numbers, but the trend is definitely up and you're definitely on the low end of average.