Rule #1: Life provides no guarantees

Ryan Chegwidden, Executive Head: Product and Technical at Altrisk

While you may hope that the worst won’t happen to you, relying on hope to protect your financial security is risky. The increasing cost of long-term insurance may seem like a financial burden, especially in tough economic times, but the potential cost of not having cover is so much higher. These real life stories demonstrate just how important financial planning is to your future wellbeing.
There are no guarantees

At 41, Paul was happily married with two children, and ran a successful business. Besides the pressures that come with being a business owner, Paul had a healthy lifestyle.

In April last year, he developed a mild but persistent cough, more of a nagging irritation really, and it was only when a growing back pain got the better of him that he went for a check-up. Paul went for a few tests and even at this stage, he was not overly concerned.

But the results were devastating. Paul had stage three cancer. The back pain was caused by a tumour that had grown around his spine and lungs. His cancer treatment was ruthless and for months he was bedridden and unable to work. Sadly, Paul never completed his treatment, and passed away just six months after his diagnosis.

But Paul was financially astute and had a comprehensive financial plan. His medical bills were paid in full through his medical aid. His critical illness cover and income protection saw him through the months of not being able to work and the 24-hour home care he needed. His business kept going, thanks to the key-man cover and the buy-and-sell agreements he had in place with his brother, who worked in the business. His life cover sorted any outstanding debts, secured their family home, and ensured that his wife and children would be able to sustain their lifestyle.

The fine line between having it all and losing it all

Chris is a maverick 50-something entrepreneur who tends to flirt on the side of risk a little more than he ought to. He runs an engineering business, loves to take his motorbike out for a burn and his Greek ancestry imparts him with a love for good food and wine.

He runs his business as a one-man show and it’s always been subject to the ‘two-hands syndrome’ — if Chris is not working, his business is not making money. With Chris, it was either feast or famine.
It was his love of a feast that got him in trouble with a high cholesterol level —a combination of genetic factors and not such a great lifestyle. His expanding mid-life girth and high cholesterol contributed to a health scare three years ago, but not so much that it would galvanise him into action to commit to some healthier habits, let alone an annual medical.

Unlike Paul, Chris was as cavalier about his financial security as he was about his health.

Three weeks ago Chris collapsed at home. He is fighting for his life in a high care ICU unit in a private hospital. He is unconscious, diagnosed with chronic diabetes, organ failure, including pancreatitis and kidney failure, is on dialysis and on a respirator.

But here’s the real kicker — Chris has no critical illness cover, no disability cover, no income protection and no medical aid. He only has a small life policy which he took out years ago.

Chris never considered that the unthinkable would happen to him. Now his loved ones are faced with a financial catastrophe. His family and friends are struggling to find the money to keep him in a private ICU facility to give him the best chance of survival. His partner Joanne has given her entire life savings of R250 000 to keep Chris in a private hospital, and its nowhere near enough. His assets and equipment from his business have been sold off to secure a few more days in the ICU. His house will have to be sold to defray further costs.

The situation is heart breaking.

• His most valuable asset, his ability to earn an income, was not insured.
• His house, his last remaining asset, hangs in the balance. If Chris survives, he will have no home to go to, and will have to rely on others to sustain him until, and if, he gets back on his feet.
• With the massive organ failure, Chris will be disabled. He certainly won’t be able to work at the pace that he could before. He has no disability cover and no other means of earning an income.

His story could have been so different if he had a financial plan with long-term cover in place.
So the next time you procrastinate about sorting out your financial plan and getting the advice of a professional financial advisor, thing about Paul and Chris. None of this is fiction — it all happened.

Many people say and believe “that will never happen to me.” Your question should be “why not me?”

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