Matthews IFA Ltd
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Financial meltdown!

Surviving a serious illness can often create financial pressures, increasing the need for financial support.

Recent figures published by Cancer Research UK show that half of all people diagnosed with cancer in England and Wales will survive for ten years or more. This encouraging and pleasing statistic results from an analysis of more than seven million patients that were diagnosed with cancer since the 1970s.

The picture is, however, very mixed. Ten year survival rates for breast and testicular cancers and malignant melanoma are 78 per cent, 98 per cent and 89 per cent while those for pancreatic and lung cancers are only one per cent and five per cent.

Early diagnosis and significant improvements in treatment and aftercare are the obvious reasons for these improvements but the good news only partly hides the fact that more than one in three people in the UK will develop cancer during their lifetime.

The majority of these will occur in later life but it is sobering to discover that one in 35 men and one in 20 women will develop cancer before they reach the age of 50.

The impact of a cancer diagnosis on a family is always significant but its financial implications can be catastrophic. Surviving a serious illness can often create financial pressures, increasing the need for financial support.

The need to cover mortgage payments, council tax, utilities and childcare doesn’t disappear and some costs, such as childcare, may increase. Many employers provide sick pay, but often only for a short period and state benefits are very limited.

Many people who are well enough to return to work can’t always work the same hours as before, so they could well experience a long-term drop in income.

Most families work with a monthly budget, measuring income against expenditure. Removing a source of income, and then adding potential additional costs will quickly illustrate how vulnerable the majority of families are.

‘What would we do if….?’ is a powerful question. If the answers are that the family would have problems, the next series of questions are ‘What do we need to solve these problems?’

This exercise is no more than a risk assessment for a family. Having identified the risks and what needs to be in place to ameliorate them allows the family to develop a strategy to make sure that they are able to weather these storms.

Critical illness insurance provides a possible solution by providing lump sum or income benefits if a serious illness, including cancer, is diagnosed.

Critical illness cover was launched in South Africa in 1983 and its invention is credited to Marius Barnard who was a member of the team, headed by his brother Christiaan, that performed the world’s first human heart transplant in Cape Town in 1987.

Having seen the financial hardships faced by his patients, Barnard approached a number of insurance companies and worked with them to develop policies. He is credited with stating that as a medical doctor he can repair a man physically but only insurers can repair his finances.

Modern policies cover dozens of serious illnesses. Until recently, the policy benefits would only be paid when the diagnosed condition reached an advance stage but the introduction of graduated payments by a number of leading insurers means that benefits can be paid in stages, starting with a portion of the cover even if the condition is at early stages.

We all insure our homes and cars and many extend their insurance covers to pets and mobile phones. The majority of people, however, do not carry any cover that protects them from the financial effects of a serious illness.

Those that survive cancer for a prolonged period are blessed with the priceless gift of time but providing financial support, while carrying a cost, can make that time even more precious.

The older you get the more expensive the premiums become, and the greater is the danger of you becoming uninsurable due to deteriorating health. It is therefore essential to get adequate insurance cover sooner rather than later, if you want to protect your family whilst keeping the costs as low as possible.

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