The old adage, ‘fail to plan, plan to fail’, is true when it comes to financial planning. You must at all times be prepared for the inevitable crisis in life. No human being can avoid challenges of life but you can move through them with dignity, grace and the best financial plans possible when you are well prepared. You need to plan for the worst to make yourself as safe as possible and protect your family effectively. If you act with grace when under pressure you will face life with a renewed sense of purpose and security. In the coming series in this column we shall look at various financial challenges life may through your way and how to plan for them so that you can come out unscathed. Let’s get started with a health care strategy.
When faced with a personal challenge such as health crisis and you mimic the chaos, which is bound to be around you at the time, you will appear desperate or fearful, and put yourself in further jeopardy as you reduce your chances of coming out of the challenge unscathed. If you have no long-term financial plans for a likely crisis in life, especially those that may impact on your finances, you end up losing the power you have built over the years and becoming burdened by discomfort, fear, and indecision.
Often in times of crisis, especially those to do with illness and bereavement, families and individuals turn to women who are considered natural caregivers. Women are recognised for their dependability because they often confront domestic emergencies and lead families through them – whether it’s a trip to the hospital, comforting a sick one, handling funeral arrangements, or researching new treatment protocols for a serious illness. For this reason, women should be in the forefront in charting for preparedness in many areas of life – from health care to insurance to divorce and personal protection. They should prompt the men in their lives – spouses, partners, friends, family members, children, and even work colleagues to take health issues seriously.
Have a health care strategy…
One of the biggest risks to building wealth is the rising cost of health care, which can wipe out your wealth if you are not well cushioned. The fact that no one individual or family is immune to health challenges means that we should all include a health care plan in our overall wealth building strategy. If you find yourself caring for your aging parents, like most people do, or if someone in your family falls critically or chronically ill, having a health care strategy in place will increase your odds of navigating the crisis successfully.
Some people think they can do without health insurance because they hardly get sick, or settle for other plans such as using their savings if a health crisis strikes, but this is a big financial mistake. The fact that you don’t get sick does not mean you will not get sick in the future. A chronic disease can wipe out all your savings in no time, especially if it strikes when you or your family member are young.
If you have a chronically ill child, it will mean life-long support and without adequate health insurance, this can be a nightmare. Disability insurance is just as important as general health cover because if you can’t work, you must ensure that you will have an income. If you are involved in an accident that leaves you disabled for the rest of your life and unable to work, a disability cover kicks in to help you pay bills and ensure that your life does not drastically change from what it was before the accident.
Health insurance facts…
The first bullet point in any health-care strategy is insurance, and the first person you should purchase for is yourself. If you are familiar with flying, you are advised to put on your oxygen mask first before assisting a child in case of an emergency. You are advised to do this because you cannot care for others if you are not healthy yourself or are perpetually worried of what would happen if you fell sick. Because health insurance is expensive, there are many people without a cover but this is not an excuse not to have a plan in place.
The most important thing is to ensure you have a cover commensurate with your income. There are many health care covers available in the market – from the government’s national health insurance fund, NHIF, to insurance companies and the more inclusive health care providers such as Resolution Health, AAR and BUPA, to mention a few. Most employers also provide basic health cover, which you will need to study to see if it meets your needs and those of your family members. If it is not a comprehensive cover, you can supplement it to get better coverage.
The first piece of wisdom is to keep a strong health insurance policy that gives you full coverage. You never know when the emergency is going to hit, and you never know how far it’s going to take you. You could end up with all your savings wiped out in one year if you didn’t have a medical cover and you or a member of your family was diagnosed with a disease like cancer whose treatment is usually complicated, expensive and takes time.
If you are self-employed, health-care coverage can be prohibitively expensive. The best strategy is to join a group policy rather than purchase an individual cover. Some health care insurance providers have reasonably priced group covers and you could discuss with them if you can join an existing group or form your own with your friends, or family members, or a group of like-minded people. But for any insurance cover you sign for, ensure you read the fine print on hospital stays and coverage limits. You should get coverage that allows you to get regular health check-ups, mammograms and other preventive tests. Remember, prevention is always better than cure.
If you don’t have, or can’t afford health insurance cover, ensure you at least register yourself and family members with NHIF and also open a special savings account to cater for life’s crisis such as ill health. Deposit some money in this account regularly and never use it for any other purpose but what it was intended for. The longer you have such an account, the more it’s likely to grow and within no time it may even enable you to purchase a comprehensive medical cover. Open such an account as soon as you are on a regular income, no matter how small the earnings may be.
Many people think that the workers’ compensation cover provided by most employers under the law will cover them if they should ever become disabled through an accident or illness. This is an inaccurate assumption. Workers’ compensation assists you only if you are injured on the job, but most accidents are not work related. If you qualify for workers’ compensation, also know that the payout is not that large. Disability insurance is one cover we strongly advise you should not live without. Make sure your policy is non-cancellable and provides guaranteed eligibility without medical examination. If you are a business owner, you can buy a policy for yourself and your employees. The price you pay will depend on your age, health, occupation and the types of disabilities you want to protect against, as well as the percentage of the income you want to replace.
When making insurance claims, ensure you do it as spelt out in the policy document. If you don’t have the time to do it, seek help. If you are sick, have a sick child, parent or spouse; it may be overwhelming for you to make sure the insurance claims are handled properly. Many insurance companies will decline to pay if you violate the rules, for example, reporting to them when you are admitted in hospital or seeking pre-authorisation.
It can be exhausting to appeal denied claims or investigate charges for expenses not covered by your insurance company. To avoid getting into such messes, ensure you fully understand your insurance policy, what is covered and what is not, how to make a claim or seek treatment, and the restrictions of the policy. For example, some covers only allow treatment in listed hospitals and clinics; others limit you from seeing personal doctors, while others only allow outpatient treatments within their health facilities. Make sure you are comfortable with these restrictions before taking up the cover. Also, ensure to check what the policy says about renewal. Some give a grace period within which to renew while others expect payment immediately the policy falls due.
The other sure method to help you get the best medical cover and ensure your interests are taken care of is using a broker. Brokers will look for a policy that meets your needs and is within your budget. The beauty about using a broker is that he is knowledgeable about insurance and will compare different providers before recommending one to you. He will also help you understand the finer details of the cover and all the benefits. You could also use your broker to make claims on your behalf, especially when you are so involved with the patient that you have no time for details, or are the one who is sick and don’t have any one to help you make claims or follow them up.
In the next issue, we shall guide you through the steps to take when illness strikes whether you have a health insurance cover or you don’t.
Published in September 2013 Issue….