Five essential planning tips for chronic illnesses.
Simple ways to manage your health and your financial future.
About 60% of Americans live with at least one chronic condition like arthritis, hypertension, asthma, and diabetes.1 These chronic illnesses may frequently require regular treatment, close monitoring, and often costly maintenance medications. So how do you manage your illness day-to-day and also keep an eye on your future financial health? Here are a couple of quick tips.
- Share your health history with your financial professional.
Many people do not share their illnesses with their financial advisors or factor them into their financial plans, which is a big mistake. 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. Speak openly with your financial professional so he or she can help you understand what products can help you manage your expenses.
- 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.
- Review your investment strategy to ensure it covers your needs.
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. Conversely, 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.
- 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. We have a rider that provides an opportunity at an additional cost for the policyowner to receive a portion of the policy’s face amount should the insured become chronically ill.
For those who already own a life insurance policy, if your policy accumulates cash value, you can borrow against it. Keep in mind: loans against your policy will accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest, and withdrawals will reduce the available death benefit. If your policy has an accelerated benefits rider, then at an additional cost you may be able to unlock a certain percentage of your death benefit to use while you are alive. If you are a caring for a loved one with a chronic illness, you’ll want to make sure your own life insurance is in place and sufficient to support the person you are caring for in case you pass away unexpectedly. Discuss your alternatives with a New York Life Agent.
- 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 ahead 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.
A New York Life agent would be happy to get together for a free, no obligation meeting to discuss your financial security needs. Click here to find an agent near you. Neither New York Life Insurance Company nor its agents provides legal or tax advice. Please contact your legal and tax advisors about how the general concepts in this article may or may not apply to your personal circumstances.