Critical illnesses can take a toll on more than just your health. It can also have a significant impact on your finances. Some of the financial burdens that could come with a critical illness include increased expenses, loss of income, and bankruptcy. Having a critical illness insurance policy can help lessen the financial impact of a critical illness. Here's what you should know about how a critical illness can affect your finances.

Increased expenses

There are a variety of new expenses that can come with having a critical illness. You'll first have medical bills that need to be paid for. The amount that it'll cost will depend on what critical illness you have, the amount of time you'll need to be hospitalized, and the treatment you need for recovery.

You may choose to pursue experimental treatment to help heal your illness. And there could be the need to travel to a hospital far from your home, which leads to increased travel expenses. There's also the possibility you'll need to stay in a hotel near the hospital overnight to be available for your treatment.

If you have children, you may have to hire a nanny or an overnight sitter. Other unexpected expenses may come along, and all of them in total could quickly deplete your savings and emergency fund. Critical illness insurance will help you with paying all the increased expenses you'll have. Unlike health insurance, the money from a critical illness insurance policy is paid directly to you, unless otherwise assigned. You're able to spend it on whatever expense you need the most help with.

Loss of income

Some critical illnesses may cause you to miss work for an extended period of time. Others may even be so severe that it forces you out of your current job indefinitely. Your time missed from work can result in a loss of income if your leave is unpaid. If you don't have a high amount in your savings or emergency fund, a critical illness insurance policy can help with your living expenses. It can help with groceries, rent, and any other monthly expenses you have.

Bankruptcy

A study reported by CNBC found that 66.5% of all bankruptcies are due to medical issues because of the high cost of care or time missed from work1. Another study also found that only 44% of Americans had enough saved to cover a $1,000 emergency expense2. The consequences of bankruptcy can include the loss of personal property and damaging your credit. A creditor who sees a bankruptcy in your credit file may decide to only offer you credit at a high-interest rate. They may also decline to extend your credit. Choosing a critical illness insurance policy with a high coverage amount can help prevent you from having to file for bankruptcy. Given how much a critical illness can affect your finances, it's important to consider a critical illness insurance policy to help you maintain financial stability.

[Footnote sources]

1 CNBC. "This is the real reason most Americans file for bankruptcy." Published February 11, 2019.

2 The Hill. "Survey finds more than half of Americans can't afford a $1,000 emergency." Published January 19, 2022.

In Oklahoma, Policies B71100OK & B7110HOK. This is a brief product overview only. Coverage may not be available in all states including but not limited to: ID, NJ, NY & VA. Benefits and/or premiums may vary based on the state and benefit option selected. Riders are available for an additional premium. The policy has limitations, exclusions and pre-existing condition limitations that may affect benefits payable. The policy may contain a waiting period. Refer to the policy for benefit details, definitions, limitations and exclusions. For costs and complete details of the coverage, contact your Aflac insurance agent/producer.

Coverage is underwritten by Aflac.

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