Living with chronic illness and managing the cost

As the number of older Americans continues to rise, so does the demand for chronic care services. And while we all look forward to enjoying a long and fulfilling retirement, it’s just as important to prepare for the financial impact that a chronic illness can have on our lifestyle, family, and future.

The cost of chronic disease

Chronic diseases and mental health conditions account for 90% of the nation’s $4.9 trillion in annual health spending, a share that keeps rising as Americans live longer.1 At the individual level, the cost of chronic conditions is also taking a toll. For example: In-home homemaking services average $75,504 per year, assisted living $5,900 per month, and a semiprivate nursing-home room $111,324 per year.2 And even when care is provided by family, the average caregiver still spends about $7,200 out of pocket annually.³

Financial tips for managing chronic illness

According to the CDC, six in 10 Americans experience a chronic illness like heart disease, cancer, or diabetes.4 These chronic illnesses may require frequent treatments, close monitoring, and often costly medications. So how do you manage your illness while, at the same time, keeping an eye on your future financial health? Here are several tips to help manage the cost. 

1. Share your chronic illness with your financial professional

Speak openly with your financial professional so they can advise you on products that can help you manage your expenses. There’s a lot you can do today, such as budgeting for day-to-day expenses, taking advantage of healthcare savings accounts using pre-tax dollars, purchasing disability coverage (if it is not offered by your employer), and considering long-term care insurance.

2. Keep track of your claims, coverage, and chronic disease costs

In addition to understanding what your health insurance covers and what it does not, you should also track your out-of-pocket expenses like deductibles, copays, coinsurance, and non-formulary prescription drug costs. Discuss your healthcare costs with your financial professional. You may want to simplify your record keeping and consolidate accounts to help you readily view a snapshot of your finances. In addition, make sure a close friend or family member can access your information in case you become seriously ill or incapacitated.

3. Review your investment strategy

You may need to update your investment strategy since your risk tolerance and income needs may change if your illness progresses. For instance, you may need more liquidity to manage short-term needs, like new medication, treatment/therapy, or modifications to your home. 

If you are young and have a condition that is manageable for the long-term, you may want a more aggressive strategy to make the most of your time horizon. You’ll also want to consider how long you may be able to work. If you anticipate you may need to retire early, take a long-term absence, or reduce your hours, factor those events into your overall plan.

4. Create an estate plan

An estate plan can provide peace of mind for someone with a chronic illness. Not only does it help you plan for how you want your assets settled, but it also allows you to make decisions about your medical care, finances, and care of dependents if you become too ill to make your preferences known. 

Your estate planning should include creating a living will that makes specific decisions about your medical care. You should also consider giving power of attorney to someone you trust so that they can manage household details like paying bills and filing taxes if you become temporarily incapacitated.

 5. Learn how your life insurance can help

If you have a chronic illness and own term life insurance, you may want to consider converting it to permanent life insurance so that your loved ones are protected. Depending on what type of permanent life insurance you have, you may be able to access benefits today for expenses when you become seriously ill. 

• If your policy has an accelerated benefits rider,5 you may be able to use a percentage of your death benefit to help pay for care while you are alive. Keep in mind: Loans against your policy will accrue interest and decrease the death benefit and available cash surrender value by the amount of the outstanding loan and interest, and withdrawals or partial surrenders will reduce the available cash surrender value and the death benefit. There may also be an activation fee to use this benefit.
• If you are caring for a loved one, or living with a chronically ill spouse, you’ll want to make sure your own life insurance is in place and enough to support the person you are caring for in case you pass away unexpectedly. Discuss your alternatives with a New York Life agent.

More about living benefits and accelerated benefits riders

Available on most whole life, term life, universal life, and variable universal life policies issued on January 1, 1985 or later, a living benefits rider provides flexibility to access your policy’s death benefit to pay for the expenses of a terminal illness.⁶ If the insured becomes terminally ill with a life expectancy of 12 months or less, you can accelerate the death benefit while the insured is living to help pay for expenses associated with the illness. This rider enables you to: 

• Access funds when you need them most. 
• Reduce the financial stress on you to cover medical expenses associated with a terminal illness. 
• Receive cash benefits that are generally income tax free. The tax advantage of the rider may not apply if you are not the insured.

While this rider is often included in your coverage at no additional cost, you may have to pay an administrative charge or other fees when you exercise it.

How accelerated benefits work

This rider can be added to your policy at any time.⁷ The rider will enable you to convert a portion of the policy’s death benefit to cash if the insured becomes terminally ill with a life expectancy of 12 months⁴ or less. Requirements for accessing your policy’s death benefit: 

• Complete an application requesting the cash benefits from your qualifying policy. 
• Determine amount of death benefit you want accelerated.⁸
• Provide proof, usually a physician’s statement, of the insured’s life expectancy. 

Once the insured qualifies, you will receive a lump-sum payment, minus: 

• The cost of paying the death benefit early (between 10% and 15%) and 
• A $100 administrative fee for the first policy and a $50 administrative fee for any additional policies; not to exceed $150 in fees. 

If there are any unpaid policy loans, the same percentage of the eligible accelerated death benefit will be applied to the loan balance, and this amount will be subtracted from the accelerated benefit. The rider can be exercised only once and is terminated once it is exercised. Note: Exercising this rider will reduce the available cash surrender value and death benefit of this policy.

Living with chronic illness FAQs

RELATED CONTENT

Neither New York Life nor its Agents provide personalized tax or legal advice. Please consult your legal or tax professional regarding the general concepts in this article. 

¹ “Fast Facts: Health and Economic Costs of Chronic Conditions,” CDC.gov., August 8, 2025.

² “Cost of Care Survey 2024, Median Cost Data Tables,” CareScout.com, March 4, 2025.

³ “AARP Research Insights on Caregiving,” AARP.org, March 27, 2025.

⁴ “About Chronic Diseases,” CDC.gov, October 4, 2024.  

⁵ Receipt of accelerated death benefits may affect eligibility for public assistance programs and may be taxable. You should consult your tax advisor regarding your circumstances. 

⁶ For survivorship policies, the rider can only be added following the death of the first insured. 

⁷ Various states have established different life expectancy periods once terminal illness is diagnosed. Your New York Life agent/NYLIFE Securities registered representative will be able to provide you with information specific to your state should you wish to request the benefits. 

⁸ For variable universal life policies, if you accelerate less than 100% of the eligible proceeds, the remaining face amount of your policy after we pay this benefit must be at least $50,000. We do not permit any subsequent acceleration. 

⁹ “Chronic Care Management Services,” Medicare.gov. 

¹⁰ “Chronic Care Management Patient Costs: Justifying Their Investment,” March 17, 2023. 

The policy form number for New York Life Whole Life Series of products is ICC18217-50P (4/18); New York Life Yearly Renewable Term is ICC22423-135P; New York Life Universal Life is ICC19-319-51P; New York Life Variable Universal Life Accumulator II policy form number is ICC 13313-30; Living Benefits Rider (ICC18218-498R). SMRU: 5014113