A sudden illness or unexpected injury can have devastating effects on your bank account. Medical bills, extra medications or medical supplies, and loss of work can quickly drain even more robust savings. By taking necessary steps to be prepared for the worst, you will have a better chance at covering the expenses in case of illness.
Here are some ways to protect your financial situation when illness occurs:
Set Up an Emergency Fund
One of the best ways to protect yourself from unexpected expenses is setting up an emergency fund. While many experts agree having enough money to cover three to six months of expenses is desirable, it may seem out of reach for families living paycheck to paycheck. Start by setting a smaller goal–say 1000 pounds. The Dave Ramsey blog gives a couple of great ideas to start building your emergency fund. Selling your unwanted items and taking on a side hustle like completing online surveys or walking neighbors’ dogs could start adding some money to the fund. In addition, consider working some overtime or getting a second job–even temporarily. If working extra doesn’t appeal to you, take a look at your budget and what you are willing to sacrifice to protect your family. Skipping a couple of meals out a week or a trip to the show will slowly start to build your emergency fund.
Purchase Protection Insurance
Protection insurance can make up for lost income due to an accident or illness. There are several products covering a variety of circumstances. The key to deciding how much protection you need is by determining the risks and benefits of protection insurance against the cost and coverage. For example, a healthy, younger couple renting an inexpensive apartment would need less coverage than an established family with a mortgage. When considering your coverage, you should determine your take-home pay, daily living costs, debts, and mortgage or rent payments. The monthly payments (known as premiums) will depend on your age, marital status, lifestyle, current health, occupation, and if you smoke tobacco. Though some may be steered away by the monthly cost, if the unforeseeable happens and you can’t work due to accident or illness, income protection will pay a percentage of your income to help cover the bills and expenses that will inevitably pile up.
Consider a Short Term-Loan
If you need some quick money to cover expenses when becoming ill, a short-term loan can ease the burden. This allows borrowers an opportunity to get funds fast and without much hassle. Short-term loans are often smaller than traditional loans with higher interest rates. Also, they require the borrower to pay back the full amount in a shorter period of time. They are best used for emergencies when other options, like your emergency fund, are exhausted. If your illness has temporarily impacted your income, but you know you will be returning to work soon, these loans can help you cover expenses until you’re earning a paycheck again. Just remember: these loans are not intended to solve long-term financial issues and need to be paid back on time to avoid costly fees.
We all want the security of knowing we are protected when unexpected illnesses arise. By knowing your options and having a firm grasp of your income and expenses, you can be prepared for these unfortunate events.