Critical illness insurance may not be the sexiest of topics, but it’s certainly an important one!
What would you be doing today if you had been diagnosed with cancer last night? How would you feel? What would be the financial issues facing you and your family? It’s a horrible thing to think about, and it’s always very hard to consider your own mortality but, with people living longer and medical treatment getting better all the time, it is something you need to keep in mind. These days cancers, strokes, heart attacks and other diseases that would have been the kiss of death 30 years ago are now something you can survive. It definitely can be something that keeps me up at night and the older I get, and the more friends and family I have that are touched by serious illness. So what would happen if you were sick? How much financial freedom and wiggle room does your family have? If you needed to take six months or a year off to recover, how quickly would your savings be used up?
Critical Illness insurance will give you a lump sum of money if you get sick. It is a simple insurance: you get sick with one of the illnesses covered, you get cash. You can use that money for whatever you need to and there is no need to pay it back when you recover. It is separate from your health insurance and is purely a way of making sure that if you fall seriously ill, money isn’t a worry. It’s also surprisingly good value. A 35 year old woman, wanting $1,000,000 of insurance paid out if she gets ill, would only be paying around $500 per month* (which for a lot of us is less than a big night out each month) for total peace of mind. For a lot of my clients it is something that they have never considered but they are so grateful to have in place if, or when, things go wrong.
Read more: It’s Tax Time: Here’s What To Know About Filing Your Return
Nearly one in every three deaths in Hong Kong is due to cancer. Between 2005 and 2015, one in four men and one in five women developed cancer in Hong Kong before the age of 75**. At a Breast Cancer fundraiser last year, I was shocked to find out that the actual out-of-pocket, real cost of treating cancer (even in a public hospital) could exceed $270,000. That amount still doesn’t include the targeted therapy and immunotherapy you may need since the Hospital Authority does not offer these services for free. Cancer treatment at a private hospital could set you back over $1.3 million. Not every company or private health insurance cover can cope with this.
Critical Illness insurance commonly covers diagnoses including cancer, heart attacks, strokes, major organ failure, end-stage heart failure, coronary artery bypass disease, Alzheimer’s disease, deafness, blindness, benign brain tumours, severe burns, paralysis, comas, and more. Any of these could happen to all of us and if you examine your family history and friends, you may well know several people affected. This type of insurance provides a lump sum of cash if you get sick, and that money can be used for whatever you need. This is incredibly important for the breadwinner in a family as it could pay your rent or mortgage, cover your kids’ school fees, or even just give you some breathing room to take a year off to concentrate on getting better. This can also be combined with life cover so if the worst happens, your family can use this money to cope with their loss.
While death comes to us all, it’s serious illness that perhaps is our biggest risk. In fact, you are much more likely to suffer from cancer, a heart attack, or a stroke before you reach the age 65, than you are to die by then***. Ironically, this is also when you are likely to be earning and saving the most. This means a year off could have a massive impact on your family’s total finances, and consequently, their future.
Who needs insurance?
Everyone can benefit from insurance. Generally, the younger you take it out, the cheaper it is. Even if you are covered by your current employer, this can change dramatically if you take on another role.
What if I am single?
- Many single people don’t think they need insurance, but if you are single and have debts, or provide any financial support to your extended family, it is vital to make sure you are covered.
- For those of us who are independent from our families, consider how you would feel if you were to fall ill and become a burden on them. For many of us, that can be a very uncomfortable idea.
- If you have no family, or a family only just meeting its financial obligations, it’s incredibly important you have insurance as a back up so that your illness doesn’t bankrupt your family or yourself.
What if I am married or have a partner?
- A lot of things in life are much better with two incomes. If you and your partner have rented a larger apartment, bought a property, or are considering having kids, how would you cope if one of you lost your job, or even had to stop work entirely? How would this affect your savings?
What if I am a parent?
- If you are a single or married parent with kids of any age, you have a responsibility to ensure that you have enough life insurance and critical illness insurance to safeguard your family.
- If one or both of you were to die prematurely, suffer an accident, or were diagnosed with a serious illness, would you be able to maintain your family’s current standard of living? Could you still afford to pay rent, school fees, and medical expenses without using up your savings?
- For those of us who have taken the opportunity to take some time off to be at home full time, what would child care look like if one of you wasn’t able to contribute?
What if I am a business owner?
- If you are earning money from your own business and are unable to work, Critical Illness insurance can protect your business and your family if you get sick. It can be devastating for a small business to lose a key person. In some cases, if you cannot find a replacement, you may even need to shut down your business. A pay out from a Critical Illness plan might enable you to hire extra staff and reduce the impact on your company. Also, it can be included as part of the package you pay yourself and therefore be tax deductible (which really makes it a no-brainer).
Whatever your situation, by having health insurance and critical illness cover in place you can rest assured that you, your family and your business are financially covered in case of death or illness. I know that the Critical Illness insurance we took out this year means my husband and I (and any future kids we are lucky enough to have) will be covered financially and that definitely helps me to sleep better at night.
If you would like a quote for how much it will cost to ensure your family’s financial freedom in case of illness please contact Eleanor Coleman on 9885 2192 or email email@example.com
*This is an example quote and varies from person to person. This quote is for for a non-smoking 35 year old Hong Kong woman in good health
**Hong Kong Cancer Registry, Hospital Authority, November 2016
***Zurich Life claims experience for 2015
Featured image courtesy of Pixabay via Pexels, image 2 courtesy of Jair Lázaro via Unsplash, image 3 courtesy of Pietro Jeng via Pexels.