Is Critical Illness Coverage for YOU?

By Finbar Garcia LUTCF, FSS, MFA

Time and time again, I have seen people suffer because of a critical illness, not just from the medical condition, but financially. This will only add unwanted stress to an already fragile situation.

So, how do you determine if you need to have a Critical Illness policy? These are just a few factors to consider:

Family medical history: Insurance companies tend to look for early onset of chronic diseases or comorbidities in your parents. Early signs, based on hereditary traits, show there is a great possibility that a member of the family could be diagnosed with a critical illness.

Your lifestyle and habits: For some, this area of life can be changed, but if not checked early or controlled, it will lead to a critical illness or another medical condition. There are people who smoke or even drink a lot of alcohol daily. Some even take part in dangerous sports that can cause a permanent disability that may be covered under a Critical Illness policy. Curtailing some of these habits would allow you to live healthily.

Occupation: While the policy may be issued with your current occupation, if the risk of death or critical illness is greater than other occupations, then the insurer may increase your premium. This is called a ‘rating’. Not all occupations are at risk, and any downgrading of a risky occupation can allow you to have any rating removed.

Your current health:  Your current state of health is another factor. You need to look at your diet and exercise programme. One area to consider is your sugar level. The Hba1c (glycated haemoglobin) test reads your sugar levels over a three-month period. Once your reading crosses six, you need to check yourself and your doctor for advice.

Another area is your total cholesterol level. Once this exceeds 200mg/dl, you will need to check your doctor. The total cholesterol is a combination of your LDL (low-density lipoprotein or ‘bad  cholesterol’) and HDL (high-density lipoprotein or ‘good cholesterol’). These two areas of health (sugar & cholesterol) can cause serious medical issues that will deprive you of attaining the desired coverage and living a good lifestyle if not controlled.

Having a Critical Illness policy should cover you for more than the medical expenses. If you have a personal or group health plan, that will also assist with paying the doctor and hospital fees, and any follow-up treatments needed, but not give you that immediate lump sum cash.

You will need to consider the following:

Possible medical condition: If diagnosed with one, determine the estimated medical cost and period. Being diagnosed is one thing, but not being able to earn an income is another. This is where the recovery period comes in to focus.

Your policy should cover you for at least three years of mandatory expenses. This will allow you to still meet those monthly commitments like loans and mortgages, children and personal expenses, groceries, and any other expenses essential to maintain a reasonable standard of living.

Your personal savings should not be used as a Critical Illness fund. Simple math will show you that even if you paid an insurer $9600 per year for a $1 million Critical Illness policy, and you carried that policy for 20 years, your total contributions will be $192,000 but you are insured for $1 million.

In 20 years, you would not have saved that million dollars. Will you be seeking treatment at a local private hospital or overseas? Once you decide to seek medical treatment abroad, then the cost will be much more than you can imagine, and your policy may not carry you that far. These are things to consider in advance.

Don’t take your health for granted. Regular check-ups will mitigate any possible future medical issues. Let’s discuss if you need some personal advice.

“If you don’t sacrifice for what you want, what you want will become the sacrifice.”

Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com or call 620-1185.