The emotional and financial toll of living with a chronic disease can be devastating. This list of tips can help with managing the financial impact of a chronic illness on an individual or family.
According to the CDC, six in ten Americans experience a chronic illness like heart disease, cancer, or diabetes.1 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 a couple of quick tips.
1. Share your illness with your financial professional.
Speak openly with your financial professional so they can help you understand what products 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 health care savings accounts using pre-tax dollars, purchasing disability coverage (if it is not offered by your employer), as well as long-term care insurance.
2. Keep track of your claims, coverage, and 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, co-pays, coinsurance, and non-formulary prescription drug costs. Discuss your health care 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 are ill.
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 he or she 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.
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.2 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:
This rider can be added to your policy at any time.3 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:
Once the insured qualifies, you will receive a lump-sum payment, minus:
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 only be exercised 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.
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.
2 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.
3 For survivorship policies, the rider can only be added following the death of the first insured.
4 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.
5 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.
The policy form number for New York Life Whole Life Series of products is ICC18217-50P (4/18); New York Life Yearly Convertible Term is ICC18218-135P; 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: 527433