Living with a chronic illness can be challenging on all fronts. Aside from the obvious physical demands of the illness, there are also the financial implications to worry about, like how the illness may impact your finances in the long-term.
If you have been diagnosed with a chronic illness, do confide in a trusted financial advisor to ensure a plan is created to fit your needs. This will also lessen, if not eliminate the full impact of the illness on your finances.
1. Fix a budget
Budgeting is probably the easiest way to fix your finances. At any one phase of your life, you must be able to craft your budget according to your needs and lifestyle.
If you are diagnosed with a chronic illness, you must adjust your budget accordingly. A good budget will help you with your daily needs and serve as a foundation for your future.
Consider these when mapping out your financial plan:
- New expenses – medicine, medical services, new diet requirements, equipment
- Additional expenses to change your lifestyle to a more positive one
- What you need to prepare for in the future
- What you need in order to safeguard your financial future
2. Organise and simplify your financial records
Keeping your financial records organised and simplified will help you see the bigger financial picture and have better control of things. It may possibly reveal some past investment that can be used now to help meet a medical expense.
Find existing health insurance policies or life insurance policies from which you can make medical claims. Aside from possible financial support for your daily expenses, you may have policies that can give you a lump sum amount after the diagnosis of your illness.
Once you have organised your financial statements and documents, keep them in a safe place and tell at least one trusted individual about it. This will be useful in the event of an emergency, and when those files need to be accessed.
3. Review your insurance coverage
Some insurance institutions will not allow you to purchase additional life insurance anymore. This is true if you’re aiming for regular policies with medical support or which need to be verified with medical examinations.
Some policies do not need medical examinations and will still offer guaranteed coverage. Before getting additional coverage, review your existing insurance policies first. What do they cover? How much can they give? What are the requirements for claiming coverage?
Aside from the medical conditions, check the finer print to see what else you can juice from it. Look into its disability coverage and learn all the terms and conditions so that you can assess what you can still claim.
If you believe there is a need to purchase additional policies, contact your trusted advisor and ask what you can receive given your specific condition. At the same time, ask about your existing policies. Find out if your policies have accelerated living benefits that you can use.
4. Re-evaluate your investments
Becoming chronically ill will affect your cash flow. If you’re still young, you may have to stop working. This means that your income will stop, but not your expenses.
Since you will need money for day-to-day expenses for your health, you will need to have liquid money.
If you have existing investments which you can withdraw from, review them and withdraw from some if needed. If not, make some modifications to ensure you receive some money, no matter what happens to your cash flow in the future.
5. Plan your estate
Do not be afraid of estate planning. Estate planning is not for those preparing for death. In fact, estate planning is recommended for young professionals who want full control and management of their finances.
Due to your sudden change in lifestyle, you will have to review your estate with the help of a lawyer, accountant, and financial advisor. The point of planning your estate is to ensure that your investments are fixed if you won’t be able to take care of them.
Estate planning will organise everything for your family and will basically act as your voice to the rest of the world. It will tell everyone how you want your estate fixed, partitioned, and used. A properly created estate plan will ensure that you have full control over the things you worked hard for.
Dealing with finances is not easy, more so if you are facing it after being diagnosed with a chronic illness. However, do not falter.
As long as you make time to manage your personal finances, it will always be in your favour. Make sure that you open up to your trusted financial advisor so that you get the best benefits.
This article first appeared in The New Savvy.
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