Budgets and Money

Preparing a Financial Plan: When a Chronic Illness or Disability Strikes

How prepared are you to deal with an unexpected illness or disability? When a health crisis strikes you or your family, be prepared with a financial plan that can help you cover unexpected and ongoing medical bills.

Preparing a Financial Plan: When a Chronic Illness or Disability Strikes

Safeguard your Assets with proactive financial planning

Many individuals find themselves unprepared to deal with the financial toll of long-term disability or chronic illness. Before you drain your savings or empty out your emergency fund trying to cover the costs of unexpected medical expenses, taking these steps may safeguard your assets and ensure that you're getting every bit of financial assistance you're entitled to.

  1. Carefully review the terms of both your health care and life insurance policies.

    You can't create a solid financial plan for dealing with a serious illness or disability until you know exactly how far your health care coverage will go toward helping you pay for it all. You and your loved ones should know early on what you'll be on the hook for in terms of co-pays, prescription costs, etc. What are your deductibles? How much will your insurer pay toward medical care before you'll be expected to foot the bill? Next, review your life insurance policy. Some types of life insurance have a disability rider that can help you pay for some of these medical costs.

  2. Make a claim on your existing disability insurance policy, if you have one.

    Unlike your healthcare insurance, disability insurance doesn't go directly toward your medical bills or health care. Instead, disability insurance replaces as much of 60 percent of your income in the event that you become disabled. If you obtained your disability insurance through an employer via a group plan, be sure to review your policy's terms and conditions. If you can, try to have both short-term and long-term disability coverage. If it's unlikely you'll be returning to work, certain insurers may offer you a lump sum payment in lieu of monthly payments, depending on the specifics of your policy.

  3. Liquefy some of your assets.

    When you're faced with a long-term chronic illness or disability, you'll want to have as many liquid assets at your disposal as possible. If a lot of your money is tied up in investments or property, you may want to consider cashing out a sizable portion and setting up a living trust so that you can more easily address the costs of medical bills, doctor visits, etc. If your condition will require a change in living arrangements, you may want to consider selling your home and downsizing to an apartment or a facility that will be better suited to your new situation.

  4. Give a trusted friend or loved one durable power of attorney.

    Even if your condition is not terminal, it's a good idea to assign someone durable power of attorney, so that they can make hard decisions about your medical treatment and finances for you in the event that are unable to do so in the future.

  5. Determine your eligibility for Medicaid, Medicare, and Social Security Disability Income (SSDI) benefits.

    Medicare is a federal health care coverage program, and Medicaid is a health care program run jointly by state and federal governments. Both of these programs provide inexpensive or even free health care coverage for people with certain disabilities. Social Security Disability Income benefits are also available to individuals with certain disabilities who are under 65.

If you'd like more tips on how to create a financial plan, set up a living trust or creating durable power of attorney, visit the Protective Learning Center.

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Financial Planning and Chronic Illness or Disability

The financial toll of long-term disability or chronic illness can deplete savings when trying to cover the costs of unexpected medical expenses. To minimize the financial impact, there are a few steps that can safeguard your assets and ensure that you're getting every bit of financial assistance you're entitled to. For more information, visit the Protective Life Learning Center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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