Preparing financially for ill health

Preparing financially for ill health

No one knows what lies ahead when it comes to their future, so preparing financially for ill health can be difficult. Being able to prepare in advance for a chronic illness or a serious condition relies on careful planning and suitable protection. Let’s look at the emotional, mental and financial impact on people and their families when they fall seriously ill.

It won’t happen to me…

“11% chance of suffering a serious illness if you are female, aged 48 and plan to retire at 68”

The above stat relates to a non-smoker, however, a female smoker aged 48 would be at a 17% risk of developing a serious illness. For a man of the same age who is also a non-smoker, the stats rise to a 15% chance of suffering a serious illness. As people get older, they can be affected by numerous health conditions, from being diagnosed with cancer to having a heart attack. There’s also the risk of being in an accident, such as a car crash.

The practical impacts of ill health or an injury include not being able to pay your mortgage and household bills, which different types of insurance can cover. But don’t underestimate the emotional and mental toll that ill health can take on you and your family. Long-term chronic illnesses can lead to depression for sufferers and stress for partners or family members who are providing care.

If you fall seriously ill or you’re injured, it’s natural to experience a range of emotions. Despite any best intentions to carry on with life as normal as possible, partners and children can be severely impacted. When a diagnosis is terminal, this will lead to people starting to grieve for someone who is still alive, evoking complex and mixed emotions. If you are in this situation, it is worth speaking to a professionally trained counsellor for support.

What are the types of protection?

“58% of all critical illness claims paid in 2022 were for cancer”
There are various types of protection available, but here are three common policies:

  • Critical illness cover – this type of policy pays out a lump sum if you were diagnosed with a serious illness or sustained an injury, and you cannot work. There will be a long list of serious illnesses and conditions that are covered by the insurance policy.
  • Income protection – this would provide regular payments to replace some of your income if you cannot work due to an illness or an accident. Typically, the sum that is paid is around 50 – 70% of your income. Payments stop when you start working again or if you retired, died or reached the end of the policy term.
  • Life insurance – this type of cover insures someone’s life. So, for example, if you passed away while your policy is active, your beneficiaries (partner and/or children) would receive a lump sum. They could choose to use this payout to cover medical bills, funeral costs, debts, loans, living costs, or they could add to their savings.

What do insurance policies consider?

“24% chance of being unable to work for 2 months or more if you are aged 50 and plan to retire at 65”

There are various online risk calculators that can give you a general idea about possible scenarios that could happen to you as you get older. But, in reality, nobody can see into the future, so it’s often impossible to predict what is yet to come in your life. Unless you have a long-term health condition, disability or there are hereditary conditions in your family, it’s wise to plan for every eventuality.

Life insurance policies, for example, will consider every aspect of your current health, as well as your age and gender. You would need to declare if you are or have been a smoker, and any existing health conditions. Your financial planner will talk you through suitable life schemes, so you understand the terms and conditions.

As well as arranging suitable insurance policies, try to put money aside for a rainy-day fund. This will give you a financial buffer if you have to wait for insurance payouts, and this money could prove useful in an emergency.

Financial protection, Nottingham

Make sure you have life cover, critical illness and/or income protection in place to protect you and your family, should the worst happen. Being prepared in advance will help to ease the anxiety of being diagnosed with a serious illness or condition. Protection policies enable you to manage your financial affairs, so you can focus on your recovery or quality of life.

Based in Nottingham with a new office in Lincoln, our financial planners will talk you through the different types of protection available. We will ensure you have adequate cover for your personal situation. If you have any questions, we will be happy to answer your queries.

Do you have adequate financial protection in place? Get in touch to speak to our financial planning team.