Are you financially prepared for a medical emergency?

Heart monitor machine

Many of us are afflicted by optimism bias believing that medical emergencies will never happen to us until they do. But being blind to life’s realities is not a viable strategy for ensuring that one’s spouse and/or children are financially protected in the event of a medical emergency. While the nature of medical emergencies is such that they are unforeseeable, it is possible to mitigate against the possibility of tragedy strikes. In this article, we explore several steps that you can take to protect yourself and your family financially in such circumstances.

Availability of useful information

In the event of a medical emergency, it would be useful for your close family members and/or friends to have ease of access to key information such as your ID number, medical aid number, allergies and/or serious medical conditions, details of any chronic medication that you’re taking. Other information that paramedics and/or emergency medical personnel will find useful includes your blood group, medical aid plan, your consent to organ donation, and the name and contact number of your general practitioner. It will also be useful for your loved ones to have access to your medical aid advisor who should be able to assist in obtaining hospital pre-authorization and ensuring that the correct admission procedure is followed so as to avoid unexpected medical bills later on.

Consider: If this information is stored on your smartphone, consider providing a loved one with a code or PIN so that they can access your phone if necessary.

Access to bank accounts

If you’re rushed to hospital as a result of a medical emergency, consider who would be responsible for managing your financial affairs or that of your household, and what information they would need to fulfill the role. For example, your spouse may need to access your bank accounts or online facilities while you are in hospital, so consider the practicalities of how they would go about transacting in your absence. Consider also your family’s need to have access to emergency funds especially if they are faced with upfront medical costs and/or travel expenses. As such, take stock of your emergency funding position and ensure that these funds can be easily accessed by your spouse and/or loved ones if necessary.

Consider: It is advisable for each spouse to hold emergency funds in their own name to ensure accessibility in the event of emergency. If all emergency cash is held in one spouse’s bank account, the other spouse may experience delays in accessing the cash as a result of security protocols.

Day-to-day money management

Ensuring that the financial management of the household can continue uninterrupted in the event of a medical emergency is essential, keeping in mind that any lapse in medical aid or life insurance premiums can have far-reaching effects on the family. The practical reality is that your loved ones will need to be able to pay the bond/rent, buy groceries, pay wages, draw money, transact, and potentially make difficult financial decisions, and it’s important to plan accordingly. Take time to check your online bank accounts to ensure that your beneficiaries are correctly identified and loaded, and consider providing your spouse or partner with your login credentials to be used in the case of emergency.

Consider: A centralised, secure password manager app is an excellent way of keeping your passwords secure. Some password managers allow users to securely share passwords with trusted contacts or team members without revealing the actual password.

Beneficiary nomination

Take time out to double-check the beneficiary nominations on your respective policies. If you’re unsure, ask your financial advisor to extract a list of your various policies and investments together with the associated beneficiary nominations and proportions. In the process, don’t forget to check the beneficiary nominations on any group life cover that you have in place. Remember, incorrect, unclear, or omitted nominations can have far-reaching consequences for your estate and the financial position your loved ones could find themselves in, and it’s advisable to review these nominations at least annually or as and when your personal circumstances change.

Consider: Keep in that the beneficiaries nominated on your retirement funds will serve as a guide to the fund trustees but ultimately the distribution of the death benefits will be based on financial dependency.

Applicability of disability cover

Be sure to keep your disability cover up-to-date and appropriate to your needs, paying specific attention to your income protection benefit which is likely to be your financial lifeline should you become incapacitated for an extended period of time. An income protection benefit is designed to replace your income at the level that you have nominated on your policy if you become temporarily or permanently disabled and unable to generate an income. In particular, pay attention to the waiting periods attached to your policy as you will need to be able to self-fund during this period before your claim becomes payable. The waiting period, which is generally set at 90 days, refers to the period during which you must wait after becoming unable to work due to illness or injury before you can receive benefits from your policy.

Consider: Any significant changes to your circumstances should trigger a review of your income protection benefit to ensure that the correct level of income is nominated on your policy.

Estate planning documentation

Having up-to-date estate planning documentation in place can be a huge comfort to your loved ones, both emotionally and financially. Naturally, it is always important to ensure that your will is updated, valid, and safely secured in its original format in the event of a tragedy. Importantly, ensure that at least one member of your family or close circle is aware of its existence and location – failing which, in the event of your death, your heirs may waste precious time searching for your will which in turn will result in unnecessary delays in estate administration. Other documents you may want to put in place include:

  • A living will: A living will is a declaration or an advance directive that sets out your wishes to refuse any or certain medical treatment and care which will result in you being artificially kept alive where there is no hope of recovery and where you are unable to speak for yourself. When drafting your living will, be sure to let your loved ones and medical practitioner know of its existence so that it can be easily accessed if necessary.
  • Digital will: A digital will is an informal document that sets out the usernames, passwords, and login details to your online life. It can include your social media platforms, online subscriptions, online shopping sites, gaming sites, and even chat rooms that you frequent. Ideally, provide your partner, family member, or friend with a complete list of the online platforms you subscribe to, your login codes and passwords, as well as instructions as to how they should manage these sites in your absence or in the event of death.

Consider: Don’t procrastinate when it comes to updating your will. Often, our personal and financial circumstances change quicker and more frequently than we realise, and not updating your will to match your changed circumstances can have devastating effects on your spouse and/or children.

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