Tuesday, July 31, 2012

Why Critical Illness Insurance Should Be Considered As a Key Piece in Your Financial Plan

It can't happen to me, or can it? The truth is from the age of 18 you have a about a 1 in 4 chance of being diagnosed with a critical illness prior to the age of 65. A critical illness is basically any disease or illness that will severely impact you in a negative way to the point that you may or may not die. Regardless, you will need to focus on recovery for an extended period of time and this can have a significant impact on your financial well being.

Most people don't want to consider these scenarios but they have major impacts on you, and your family's financial security. Imagine not being able to work for 2 years while you are undergoing cancer treatments. Who's going to pay for the mortgage, the car payment, daycare, groceries, drugs, etc? It's a scary scenario. Fortunately, we have free health care in this country (for the most part), but it's simply not enough.

Let's consider the following scenario:

Bill is married with two kids. He is 40 years old, has a mortgage, a car payment, child care payments, etc. His wife works too, but the family relies on dual incomes as most of us do. What happens if Bill is diagnosed with life threatening cancer. He basically has to drop everything and seek treatment. While he's seeking treatment his income will stop. The bills will go unpaid, and the family risks declaring bankruptcy after a certain amount of time. They may have to sell the house, the car, etc. This is not an added worry that anyone battling cancer would want to have hanging over their head.

What if Bill had funds to make sure everything was taken care of during his recovery? What if it was $100,000? Would that make life easier for him and his family?

It's very difficult for many of us to amass savings of $100,000 in liquid cash solely for an emergency situation that may or may not come. What should we do?

Critical Illness insurance is probably the most viable option for everyone. For a small amount of money you can transfer a large amount of risk to an insurance company. In the event of a diagnosis of a critical illness the insurance company will pay out a lump sum of money tax free to help with everything that cannot wait while you are seeking treatments. There's your piece of mind.

$100,000 was used for example purposes in this article, and it may or may not be the level of coverage that you would need. Discussing these needs with a qualified professional is always the best place to start.

Critical illness insurance is something that many people have never considered. Working with a professional like myself will help you to determine whether or not it's truly right for your situation.

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