Financial planning is an integral component as you plan for an independent future. You can opt for various options to create your portfolio and invest in achieving your goals. However, a medical emergency or a critical illness can play spoilsport in your planning.
With the rising medical costs, the medical bill for a critical illness to you or your family member could soon dry up your finances. As you invest your hard-earned money towards achieving your personal or professional goals, it is equally important to prepare financially for a critical illness.
A critical illness certainly takes an emotional toll on you and your family but it is equally expensive and can become difficult with time to pay mounting medical and hospital bills. Therefore, it is critical to prepare financially for a critical illness.
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These four steps can help you be financially ready for a critical illness:
- Buy a comprehensive health insurance plan
The first step towards preparing financially for a critical illness is to buy a comprehensive health insurance plan. Even if you have an insurance plan that is provided to you by your employer, it is important to have a separate comprehensive health insurance plan covering you and your family members.
This is important because corporate health insurance is usually for a low amount i.e. from INR 2 to INR 5 lakh. Also, if you switch jobs, you will not have a cover in between. It is always better to take a personal comprehensive health insurance plan to help you prepare financially for a critical illness.
- Buy critical illness plan
The second step towards preparing financially for a critical illness is to buy a critical illness plan as part of your health insurance plan or your life insurance policy. Critical illness plans usually cover over 30 common critical diseases like heart-related disorders, cancers, kidney/liver failure, etc.
As a critical illness cover offers you a one-time payout that can help to cover various expenses that are not covered as part of the health insurance plan. It is also helpful in covering up for the income lost due to a critical illness.
- Buy term insurance and terminal illness plan
A terminal disease is when the patient is not expected to survive beyond 12 months after the date of confirmed diagnosis. In the third step, you can buy term insurance and a terminal illness plan as part of the term plan.
Many insurers even extend the terminal illness plan without any cost as part of the term insurance plan and offer up to 25% payout of the term insurance cover in case of a terminal illness. This helps in paying for treatment of terminal illness treatment and income lost due to the disease. For the term insurance cover, you can consider the amount that is at least 10 times your average annual income.
- Create a medical contingency fund
This is the most important step. Apart from ensuring that you have all the mentioned covers and riders in place, it is equally important to have a medical contingency fund in place that will help you in times of need.
A health insurance cover will not meet the end-to-end expenses of any critical illness. As a result, it is important to have a medical contingency fund that will help you cover expenses in such challenging times.
Always keep these funds invested in a medium which you can turn into cash quickly. This will ensure that you have the money when you need it the most.
These are the four steps that will help you plan financially for a critical illness. A critical illness to you or your loved ones is the last thing that you would want, but it is also true that in case your family has had a history of critical illnesses, it is better to plan for the future and battle uncertainty when you have the time.
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These steps will help you set the right framework to prepare financially for any critical illness you may face in the future. As you plan for buying a health insurance cover or a critical illness cover or a term insurance plan, it is important that do you do thorough research on the various insurers and match the best fit with your requirements.
