Financial Planning For Cancer
It is estimated that one in three people will get cancer at some point in their lives. Nowadays, cancer is also more common among younger people. It is thus never too early to think about insuring yourself and your loved ones against cancer. Dealing with illness can already be overwhelming, without the added stress of wondering how you are going to pay for it.
Planning ahead can help to reduce the cost burden of cancer should you be diagnosed in future. While this article provides a general overview, it is best to talk with your insurance agent for the most updated plans and details.
There are two main cost categories to consider in the event of cancer:
Covering the cost of treatment
Replacing income loss
Covering the Cost of Treatment
Medical Costs
Hospitalisation plans usually cover the bulk of the costs of treatment. These include consultation fees, surgeries and adjuvant chemotherapy and radiotherapy treatments, and ward charges.
Current laws in Singapore require a co-payment portion of about 5% (at the time of writing). This means that the higher the total cost of your treatment, the more you will have to pay out of pocket as well.
The cost of treatment also depends on whether the drugs your doctors prescribe are on the Cancer Drug List. Drugs on this list are subsidised, which will help to keep your total cost lower than it would be otherwise. For drugs not on the list, check if your insurance plan will cover these.
Hidden Costs
There are other ‘hidden’ non-medical costs that we often fail to consider. These include transportation to and from the hospital, as you may not be well enough to drive or take public transport on your own. In a case of serious illness, there is also the cost of caregiving should you require a full-time domestic helper or part-time home-nursing care.
When planning ahead to cover the cost of treatment, it is prudent to assume that you will need more than you anticipate. A good rule of thumb is to allow a 20% buffer for unanticipated as well as hidden costs.
Replacing Income Loss
Critical Illness Coverage
While undergoing treatment, it is likely that you will have to take prolonged leave from work. This could range from 5 days to 5 years, depending on the severity of your illness and how fast you recover from treatment.
During this leave of absence from work, there may be loss of income if you require more time off than your company’s HR policies cater for. You may have to take no-pay leave or, in the worst case, deal with a period of unemployment.
The Singapore Life Insurance Association recommends assuming that you will take 5 years to recover. Hence your critical illness coverage should ideally be 5 times your annual income to adequately tide you over the recovery period comfortably. Some banks and insurers in Singapore also have cancer-specific plans, which you can inquire about.
Early-Stage Cancer Coverage
If your critical illness plan was purchased many years ago, it may cover only late-stage cancer. You should consider buying an additional plan or converting your existing plan to cover early-stage cancer.
As screening availability improves and people become more health-aware, cancers are being discovered at earlier stages. This is good news as it greatly improves the chances of successful treatment and recovery. However, if your insurance plan does not cover early-stage cancer, it could be very costly for you.
Conclusion
The irony of insurance is that we buy it hoping that we never have to use it. In that light, although we hope we never get cancer, it is wise to plan ahead in case we do. It is much better to have sufficient coverage that we never have to use, than to not have enough when we really need it.
Most people who get cancer never expected it to happen to them, and the diagnosis usually comes very suddenly. So right now, when things are going well, is the time to plan ahead. Review your existing coverage, and contact your insurance agent or a cancer coach to help you deal with the financial aspects of dealing with cancer.
