Are you financially prepared when serious illness strikes?
No matter what we do, there are uncontrollable events, such as an unforeseen illness, that can derail our carefully thought-out plans and block our path towards our financial destination.
It is advisable therefore is to have a safety net against your greatest financial vulnerability—an unexpected illness. Imagine what would happen if a critical illness hits you today – wouldn’t you want to be financially prepared for such an event?
If we were hit by any of these killer illnesses, are we and our families prepared?
Many prefer to brush it aside, thinking it won’t happen to them, but the possibility of a critical illness is a reality that we all have to face. It can happen to anyone, anytime, regardless of age and status.
Let me share with you some statistics to support this truth.
1. According to NSO, the top 3 leading causes of death are due to Critical Illness.
Heart disease is still the number 1 killer in the country as proven by the 5 out of 10 deaths that are cardiovascular in nature. This is followed by stroke or Cerebro-vascular diseases. While both commonly happen to the elderly, it is alarming to note that more and more young people are afflicted with these diseases. And this is largely due to an unhealthy lifestyle.
Cancer is third on the list. Currently, fifty thousand cancer cases have been recorded in the Philippines. And cancer deaths are estimated to increase by 5% every year, which may reach 17 million by the year 2030.
2. 25% of all chronic disease deaths occur in people under age 60. What does this tell us? It simply points out that none of us can say that we are exempt from it, not even young people.
Ask yourself—If we were hit by any of these killer illnesses, are we and our families prepared?
Spare yourself from the financial heartache
When you’re hit with critical illness in this day and age, the good news is survival is highly possible. However, it is going to be very costly.
- Triple cardiac bypass surgery would normally cost about Php900,000 at St. Luke’s Medical Center.
- The Average cost of chemotherapy per session is Php60,000.
- A Kidney transplant costs about Php1,000,000 in top-notch private hospitals in the country (St. Lukes, Medical City, Asian Hospital, Makati Med).
- Cost of regular private room per accommodation in private hospitals is about Php3,500.
- Our ordeal does not end after confinement; rather, it continues since 46.5% of your money needs to be spent on drugs and medicines.
Bottom line is—when faced with heavy burden of expenses, it’s challenging to focus on surviving and recovering. And when unprepared, majority are left with no choice but to sacrifice their savings or borrow from family members. I’m sure you don’t want this to happen; rather, you want to spare yourself and your family from the financial heartache.
How can one be financially prepared?
The bright choice is to create a safety net that will ensure you’ll reach your financial destination no matter what happens. Let me explain how it works.
Situation 1: “Bahala Na” Attitude
You work hard and save a portion of your income regularly to make your dreams a reality. However, in the event of an unforeseen illness, your income stops and so will your ability to save. This can be truly devastating – both to your health and to your finances. Should you be unable to work due to failing health, you are left with no choice but to exhaust your savings to recover and survive. Worse, it may not be enough to pay for your medical bills. When this happens, your family suffers and your future life goals will go down the drain with your illness.
Situation 2: Planned ahead with Sun Life Financial
Now let’s look at how a health protection plan would make a difference. By having a safety net, you can get the cash when you need it the most—and more importantly, without draining your hard-earned funds. The lump sum money will be your source of income in difficult times, pay for your medical bills, protect your savings and sustain your family’s way of living. With a health protection plan, you are in a better position to afford survival and recovery, and you don’t need to compromise the hard-earned funds you have set aside for your family’s goal and dreams.
Let me share with you some sample solutions I’ve designed for my clients to address their diverse health protection needs.
Peace of mind in case of hospitalization and a reward for staying healthy.
The first plan here offers my clients two benefits—-peace of mind in case of hospitalization and a reward for staying healthy. For an annual budget of P20,700, my client is already covered for 10 years and will get P3,000 per day of confinement.
For example, she is hospitalized for 15 days at age 38, she will in-turn receive a total cash benefit of 45,000 (15 days x 3,000).
The 45,000, first and foremost, serves as an alternative source of income when she is unable to work and generate the money needed by the family.
Second, it alleviates her burden caused by hefty expenses, where, the cash benefits can be used as an additional money to pay for medical bills, medicines, alternative treatment, and so on. What’s more is that this can work side-by-side with an HMO—when tied up with this plan, my client can spend the cash benefits to cover a wide variety of needs since the HMO will be the one to shoulder all or most of the hospital expenses. So, what are we saying here? This plan basically provides my clients the flexibility on how and where they wish to spend the cash proceeds–may it be for personal, family, or health-related expenses.
Money Back Benefit
And lastly, aside from having peace of mind, my client will also receive a money back benefit of 103,500 (equivalent to 50% of the total annual premiums paid) after 10 years, which she can utilize for her life milestones, such as travel, start-up business etc.
What would happen if Critical Illness Strikes?
We’ve seen earlier the reality that critical illness is inevitable. This next plan is designed to combat that challenge and ease the financial worry of my clients in the event that they become too sick to work.
Critical Illness Benefit
For an annual budget that starts at P8,600 and increases every 5 years, she will get P1 Million proceeds upon diagnosis of a life-threatening health problem—an unforeseen critical illness.
Lump sum cash benefit. You are given the flexibility to spend the benefit for various options
The lump sum cash benefit will allow my client to focus her attention on getting well, rather than on the hefty expenses that come with failing health. She can use the 1 Million to pay out-of-pocket medical costs and to defray non-medical costs associated with her treatment. And since the money will be given in full, she has the flexibility to spend it as she wishes and for a wide variety of needs, such as medical services, alternative treatments, daily expenses, transportation costs, personal leisure, and so on.
But Wait, there’s More!
There is a 1 Million death benefit delivered to the surviving family should she pass away due to a non-critical illness.
Once the death benefit (payable to beneficiary) or the critical illness benefit (payable to the policyholder) has been paid as a claim, the policy terminates.
Comparison between 2 Investors. Investor 1: no health plan. Investor 2: has a health plan in force with Sun Life.
Are you an existing investor of Sun Life Financial? Do you have existing investment funds and a solid financial portfolio? Many investors think they do not need a health insurance package mainly because they have sufficient funds to cover their medical expenses in the future.
What would happen to your investment portfolio when critical illness strikes?
Let’s say I have two clients who have an investment portfolio in place to fund a specific goal in the future, like retirement for example. Both have been saving P100,000 every year starting age 30 up to 60. If everything goes well, assuming an 8% return, both will have a projected retirement fund of P12.2M.
But then life comes up with a few surprises. What if both suffer from a critical illness at age 42 and need P1M to survive?
100,000 is saved annually from ages 30 to 59 (30 payments) and fund value at 8% at age 60 is 12,234,587.
Investor #1: No Health Plan.
Let’s first look at the one that did not make the bright choice of creating a safety net.
First of all, at the time of illness and funds are needed, he will have to withdraw/redeem from his investment portfolio. Say for example he ceased his annual savings and withdrew P1 Million, this would adversely impact his retirement fund at age 60. Instead of the original P12.2Million, it will now fall down to 4.2 Mil. (see footnote in the slide to explain how we arrived at 4.2 Mil)
As you can see, without a safety net, he has no choice but to withdraw from his investment portfolio, especially if there is no other source of funding for the critical illness.
Investor #2: has a health plan in force with Sun Life.
Now, let’s take a look at my second client who has a “safety net” in the form of a critical illness coverage.
Upon diagnosis of the critical illness:
- the policy would pay a lump sum cash benefit of P1 Million, and this would be used to fund the medical expenses & other costs — thereby avoiding the need to withdraw from the investment portfolio.
- Factoring in the cost of the health protection plan and even after discontinuing the annual savings, the retirement benefit would still be at 7.4 Mil and would only drop by 4.8 Mil instead of 8 Mil earlier.
This demonstrates how you can protect your investment portfolio (or cash assets) from critical illness.
Let me ask you — what’s a better plan to secure your investment/retirement portfolio against a life-threatening ailment? To dip from one’s retirement fund OR to purchase a “safety net” / critical illness coverage?
Let’s compute for your safety net.
How much do you need to make the Bright Choice of ensuring income in case of an illness? Know a comfortable monthly/semi-annual/quarterly/annual budget that you can set aside to:
- ensure income in case of hospitalization
- have protection against a critical illness
- create a safety net for your investment portfolio
It’s time to put your health benefit needs into a plan.
Depending on your budget, we can compute how much lump sum fund this can give you in case you are diagnosed with any of the 36 critical illnesses. These are the steps that we will go through:
- We will identify and prioritize your health protection needs and shortfall
- We will compute how much those will cost in the future and adjust based on your financial situation
- We will develop a financial plan customized to your goals and budget
IMPLEMENT– We will choose the appropriate product solutions for your life goals
REVIEW– We will track your progress in achieving your life goals
Money Monkeys can assist you: