How to Prepare Financially for Illness

It’s not something we like to think about but preparing for the worst really is the best thing you can do. Growing older is an inevitability and, sometimes, illness comes with that process. The British Heart Foundation, for instance, has said that by 2035, the number of diabetics in the UK will have risen from four million to five million.

On the bright side, in this country, we are lucky enough to have the NHS, which means the physical side of illness can be treated for free, although there are sometimes long waiting times. However, the NHS cannot provide for you financially if you need to take extended periods of time off work.

There is also the possibility that, even once you’ve recovered from an illness, you may not be allowed to return to work. The Telegraph uses the example of an HGV driver not being able to get back behind the wheel of a lorry after suffering a heart attack. And although there are state benefits that apply in cases like this, they are often too small to cover all outgoings.

So, what is the answer? Well, in many cases, insurance can make all the difference. There are three types of cover that can be useful: income protection, critical illness insurance and health insurance:

  • Income protection (also known as permanent health insurance) gives you a small salary if you cannot work, which lasts until you retire or the policy ends.
  • Critical illness insurance pays a lump sum if you contract a serious illness such as cancer or if you have a stroke.
  • Health insurance (also known as private medical insurance) will payout for the cost of medical treatment.

Some people may have one or more types of insurance coverage through their employers. If you don’t it may be a good idea to look into it independently. If you don’t wish to purchase insurance, making sure you have a buffer can also be very helpful. Setting aside around three months’ salary is often advised to give you breathing room.

Steve Bryan, of The Exeter, an insurer, said: “Critical illness cover can provide a lump sum to manage the immediate impacts of an illness, but income protection is generally better suited to long-term illnesses. Some income protection products offer cover for decades, allowing sufferers to focus on their recovery without stressing about whether the mortgage will be paid.”

If you would like to speak to an adviser about your finances, please get in touch by calling 01992 500261 or emailing us at enquiries@gpfm.co.uk.

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. 

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