Financial planning focuses mostly on the death of the income-generating family member and provision for his dependants, writes financial planner Pieter Willem Moolman.
Planners often forget, however, to take into account the financial implications caused by a critical illness or traumatic event in the life of the insured.
Thanks to ever-increasing medical advancements, people are more likely to survive and recover from illnesses that were fatal in the recent past.
Even though the patient recovers, the costs associated with the treatment and aftercare of an illness such as a stroke, heart attack, cancer, Alzheimer’s or renal failure, are far reaching.
If you were to fall victim to one of these illnesses, some of your costs might include professional counselling and rehabilitation, and co-payments where your medical aid fell short in the payment of service providers.
Additional lifestyle adjustments may also be necessary to make your environment more accessible in coping with your disease. For example, you may need to hire help in the form of a full-time nurse or nanny to take care of minor children during your recovery.
Should you be unable to perform your work as you did pre-illness, you will require capital to supplement your disposable income.
Without any provision for these costs, major financial pressure can occur.
Fortunately, these costs can be taken care of and unnecessary pressure avoided if you have a critical illness benefit incorporated into your life insurance policy. This benefit can be taken as a standalone or accelerator benefit on your existing policy with minimal financial implications.
Critical illness products are designed to pay out a lump sum on the diagnosis of a critical illness or trauma event. The amount payable is pre-defined by you, the insured, at the outset.
The conditions covered may vary from insurer to insurer but all the major providers offer protection for approximately 25 illnesses.
The levels of cover differ between the various providers. Some offer a tiered payment structure based on the seriousness of the condition, whereas others offer a top-up option that ensures 100% cover irrespective of how serious the condition may be.
This is where your financial planner comes into play. With the correct advice you can be assisted in choosing the optimum amount of cover and the most suitable product for your specific needs.
Remember, your financial plan should not only consider what happens when you die – make sure that you and your dependants can still be financially independent should you survive.