How to cope financially after traumatic illness
- Financial Planning
The costs of major illnesses such as heart disease and cancer go far beyond the medical costs alone. So, what can you do to cope?
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Remember those days when you could eat what you liked without it going straight to the waistline? A time when you felt like you could live life like there was no tomorrow? Major illnesses like heart disease, cancer and stroke seemed like a million miles away.
Of course, as we get older reality kicks in. We realise how quickly life rushes by and how fragile health can be, as we see the occasional family member or friends struck by a traumatic illnesses. This makes us more acutely aware of the fact that we could be hit by one of these medical conditions at any time, even if we try to stay relatively healthy.
The statistics also tell us that prevalence of serious medical conditions can jump markedly once we pass 50. For example, the incidence of cardiovascular disease rises dramatically from 7 per cent of 18–44 year olds to 21 per cent for the 45–54 age group.
Two out of every three Australian families will be affected by heart disease
Survival rates are increasing
While the risks of contracting major diseases increase as we get older, the good news is that surviving these conditions, has also markedly improved over the past few decades. For cardiovascular disease, in the two decades up to 2006 there was a significant fall in the death rate from 830 per 100,000 people, down to 201 per 100,000 people.
However, a big practical question for those who do survive is; how will their condition affect their ability to survive financially?
With a relatively strong level of universal health cover through Medicare, supplemented by broad ownership of private health insurance, the medical costs may be substantially taken care of for most people. However, what about the hidden costs that traumatic diseases can have, such as:
- How will your condition affect your employment and your desire to continue working?
- What if you want additional specialised medical treatments that are outside of what is covered under health insurance?
- What if your condition requires additional equipment or home renovations to assist with everyday life?
- How will you cope with the stress of a mortgage and other debts hanging over you?
All of these issues involve considerable expense, but where will the money come from?
Trauma insurance may provide the answer
In 1983 the renowned South African heart surgeon, Marius Barnard, founded the first type of insurance designed to address the cost issues of major illness. We know this in Australia today as ‘trauma insurance’and many people have come to appreciate the benefits it can provide when serious illness strikes.
Trauma insurance can help you in many ways
Trauma insurance can effectively help bridge the gap between life insurance (which can only be claimed if you die), and income protection insurance, (which will only cover a percentage of your basic income). Trauma insurance is specifically designed to pay a lump sum cash benefit to help cover the extra costs associated with major illness and to improve the quality of life while you live with the condition.
How does it work?
The defining feature of trauma insurance is that claims are not based on you being ‘totally disabled’ or even on whether you are able to work. Instead it is based solely on the diagnosis of a range of specific major medical conditions, such as heart attack, stroke and cancer. This effectively means you can be paid a significant lump sum of cash to spend as you like, regardless of how much time you have off work, how well you recover or how long you live after contracting the condition.
Using the cover to transform your lifestyle
Apart from assisting with initial medical costs and seeking top medical treatment, trauma insurance allows people to make major improvements in their lifestyle, which in turn can relieve stress and improve your ability to recover.
Some may choose to use it to fund a reduction in their working hours, or to take an extended sabbatical. Others may use it to pay out debts and free up their income to spend on a better lifestyle. Another option is use the funds to fulfil lifelong goals of international travel, a holiday home or to obtain other major lifestyle assets. The beauty of this type of cover is that it is paid as a lump sum upon diagnosis for you to spend as you please.
Creating a financial plan with a trusted financial advisor gives you peace of mind
Creating a total financial plan
Of course like any insurance there is a trade-off between the cost of such insurance and the risk you take if you choose not to insure. A financial planner can help in this respect by assisting you to analyse the extent of your risk exposure in dollar terms and researching the most cost effective insurance to cover those risks. You can then make a balanced and informed decision on whether you take up the insurance or not.
If you do decide that the risks are not worth taking, then trauma insurance can be an important part of your plan to maintain your financial security.
What would you spend the funds on if you were ever to claim on a trauma insurance policy? Share your thoughts below