The Financial Consequences of Getting Sick
Shopping for insurance can be similar to shopping for a car with all the available options. This process is not so thrilling, but certain insurances are necessary for your financial security. Most people realize they need life insurance at some point, but overlook insurance that will help them when they become sick or disabled, which I find funny, since we are statistically more likely to get sick than to die.
Medical technology advances every day – we are constantly hearing about new drugs being tested, robots doing surgeries and people surviving diseases that used to mean certain death. Despite knowing this, there is still a lack of consideration for what will happen financially if one becomes critically ill. Have you ever wondered how your regular living expenses might increase during these times? What if you wanted the newest and greatest drug? Or you had to travel out of town to get to the hospital with the most experience? Maybe you want to go to the US? How will you afford for your spouse to take time off work to be with you? What will you do with your kids while you are both tied up?
The majority of people have disability insurance that will replace a portion of their income during a time they cannot work. If you don’t have disability insurance and you earn an income, go get some now! Disability insurance is without a doubt one of the most important aspects of your risk management plan. However, will it be enough to cover both your regular living expenses (including retirement savings) and all the additional expenses that you are likely to incur with a critical illness?
Critical illness insurance provides a lump sum benefit in the event you are diagnosed with one of the covered illnesses in the contract (contracts can range from covering 3 illnesses to 25, such as cancer, Alzheimer’s and paralysis). This money can be used in any way you like – but the purpose is to allow you to do whatever is needed in order to get better without worrying about financial consequences. It is paid over and above your disability insurance, so they work in conjunction with each other. There are many different plan types out there with many different features available so be sure to do your research before settling for one.
I frequently get asked if there is a situation where I should carry critical illness insurance and not disability insurance. What is the benefit of one over the other? The truth is, they work as a perfect complement to each other; disability insurance will cover your typical living expenses, critical illness insurance will cover the extraordinary expenses that aren’t part of your day-to-day life. If you can only afford one and not the other then I say get your disability insurance. Disability insurance is like having brakes on a car, whereas critical illness insurance is more like the airbags. If you had to have one or the other, which would you prefer? Back to the question in the first paragraph, would you take the airbags if you were car shopping back in the 90’s?