Life is rarely predictable, and we are often faced with adversity. Preparing for what could be or what could happen seems to form the premise of financial planning. Risk management and scenario planning can guide you to be somewhat prepared for life’s challenges. At the age of 31, I was diagnosed with Stage 3 rectal cancer, and I knew life was coming at me very fast.
As such, I would like to share some important points for those who are faced with a similar journey – or for those who want to be more prepared.
Medical Aid and Gap cover
This should be the starting point for any Critical Illness planning you do. With both Medical Aid and Gap cover in place, most of my treatment and hospital expenses were covered. Here it is important to know what your Medical Aid covers and what should be submitted to Gap cover. At some point, you will likely deplete your Medical Aid cover, and the balance should be submitted to Gap cover for payment. If Gap Cover does not pay for these expenses, it will be in your own pocket.
Claiming for cancer was a seamless process. The insurer required me to submit a report from my Oncologist confirming my cancer staging as well as a completed claim form. Once all required documents were submitted, payment was quickly made into my current account to offset the expenses. If you are unable to afford Medical Aid and Gap cover, Critical Illness cover is your next best option. At the very least, income protection could pay out if you have no Critical Illness cover in place and you are at a point where you need to take unpaid leave. To date, my total costs are sitting at more than R500 000, and this would seem like a good starting point for an insured cover amount.
Once I was diagnosed, everything happened so quickly. My treatment plan, my next meetings, possible operation dates, chemo and radiology, it all rushed at me. Knowing that my Will was in place and my beneficiaries on my investments were according to my wishes provided me with a lot of peace of mind. Your Legacy planning should be reviewed regularly and whenever there are changes in your life that affect your financial planning.
Emergency Fund and Unplanned Expenses
As financial planners, we generally all advocate for between 3- and 6-months’ worth of expenses to be saved as an emergency fund. These funds should be easily accessible and used for emergencies. My unplanned expenses included the petrol/diesel to get to the doctor, hospital, treatments, blood tests and fertility clinic, as well as the change in diet while on treatment and in and out of the hospital. With these expenses the Emergency Fund can be easily depleted. Luckily, my critical illness payout could replenish our emergency fund, and some of the balance could be invested. It is very easy to use your payouts for new cars, or a flashy lifestyle, so it is important to be present and aware of the consequences of your spending if you receive a large lump sum amount.
Qualifying medical expenses
It is very likely that you will incur expenses that your Medical Aid and Gap coper won't cover. It is important to keep your invoices and proof of payments for all these expenses as they may very well be tax deductible if they are deemed as qualifying medical expenses.
While on treatment, there were many days where I was knocked down. I couldn’t stand up and slept most of the day, not even to mention getting to making food or doing general house chores. In times like this, you are likely to be a burden on your spouse, parents, or room-mates. Finding someone you trust helps you to focus on healing, and if you are the person who is helping, be kind and patient, and be aware that there will be many small tasks the patient will be unable to do. This could include making food, going to the shops, taking/administering medication, driving to appointments, logging expenses, keeping track of their diary, house chores etc. Ensure at least one person knows how to log into your accounts and access any cash you may have available to assist in your absence.
What I know now
If I was not correctly insured and/or covered, this journey would have had a significant negative impact on the financial well-being of my young family. Feeling invincible at a young age is probable, but so is being on the wrong side of luck. Speak to a certified financial planner and be sure you have peace of mind that you and your family will be taken care of in an emergency.
* Cronje is a Certified Financial Planner at Fiscal Private Client Services