7 financial steps for dealing with a major illness
Part of our major and unexpected life events series
Financial steps that will help you prepare for the road ahead
A lot of worries come with a big diagnosis. You can take steps to help manage one of them: money. This checklist can help you get organized.
1. Create (or update) financial and health directives.
You may already have these documents, which allow a trusted relative or friend to make decisions on your behalf. Talk with your attorney about updates.
2. Review your health insurance.
Make sure you understand what it will and won’t cover, as well as your share of treatment costs. Include prescription drugs in your calculations. Look into coverage for things like home health care, physical/occupational therapy, and nursing homes.
3. Review disability insurance.
Find out how long you’re covered (and at what level) under short- and/or long-term disability insurance—either through an employer or an individual policy. Call the disability claims number after diagnosis, even if you don’t yet know if you’ll use the benefit.
4. Start long-term care.
If you have a policy, there’s often a waiting or elimination period before your benefits begin, from 0 to 100 days. If you’re on Medicare, there’s coverage for the first 90 days for things like skilled care and rehabilitation that can help bridge the gap.
5. Check your life insurance policies.
Some offer an accelerated death benefit in the event of a serious illness. This could help to pay for medical costs or other expenses. (Keep in mind that this reduces the death benefit, may have tax consequences, and could affect eligibility for public assistance. Talk with your tax advisor.)
6. Think about investments.
Once you have an idea of the potential cost of your illness, consider how you’ll pay the bills. In addition to making sure you have the financial reserves, you may need to shift more assets to lower-risk investments, such as bonds. Talk with your financial advisor.
7. Streamline finances.
Simple steps like automating bill payments, paycheck deposits, and investment transfers can remove time-consuming tasks from your to-do list.
Focus on getting better
An illness that comes out of the blue can be frightening and disorienting. But with the right financial moves, you can reduce some of the stress—so you can focus on recovery.
Want to keep track of your progress offline? Download a printable version of this checklist (PDF).
Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Securities and advisory products offered through Principal Securities, Inc., 800-247-1737, Member SIPC. Principal National, Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392.