A conversation with a recently diagnosed cancer patient really brought to the forefront the very fickle nature of life, priorities, and finances. Amidst the demands of getting various tests done, completing paperwork, and confronting the mental turmoil that this diagnosis is sure to bring, one of the conversations we had was around finances. Was she prepared financially to handle what lies ahead? Does she have insurance coverage, and will it cover treatment expenses? I felt relieved when she confirmed that her insurance coverage was adequate based on the initial calculations, and we pray that it remains that way. However, as we delved into discussing the astronomical costs involved in her care, I could not help but think about the number of Jamaicans who are simply unprepared financially to navigate this foreboding journey. Most people do not have critical illness insurance, which is different from life insurance. This means that they will have to rely on their personal finances, the benevolence of others and/or the public health system, with its limited resources and long wait times. This may not be the conversation we want to have, especially with the new year celebrations still fresh in our memories. However, the reality is that illness and the devastating impact it can have on our financial well-being is not bound by time or place. Therefore, as you contemplate the direction for your wealth journey in 2024, one key pit stop that should be included is that of insurance.

Insurance as a Safety Net

Life is filled with uncertainties and while we often focus on building a secure present, we cannot foretell the future, but we can take precautions to safeguard our loved ones and ourselves from unanticipated events. Anecdotally, Jamaicans often have an inherent distrust of insurance. However, in the same way that we do not like making wills, some individuals also superstitiously believe that taking out insurance will make things go wrong in our lives. However, if you are looking at securing your future in a responsible way, insurance is an essential part of any good financial plan. Think of it this way – an insurance policy is a back-up to your emergency fund. Together they provide protection and a financial cushion against the uncertainties, when they do occur. What kind of insurance do you need?

Life Insurance — This type of insurance is essential for protecting your loved ones in the event you die. There are two primary types: term and whole life. Term life provides coverage for a specific period, usually 30 years or less. If you pass away within the term of your policy, your beneficiaries can make a claim and receive the death benefit, tax-free. This allows them to use the payout however they choose, whether it is for paying everyday bills, funding the funeral expenses, or completing their education. Whole insurance, as the name suggests, provides coverage for a lifetime. Not only does it last for the remainder of your life, but it also builds cash value. That is, there is often a savings component to your policy, which accumulates tax deferred. This means that you will not pay taxes on the gains on these savings until you withdraw funds from them. You can also borrow against these accumulated savings (policy’s cash value). The best time to secure life insurance is when you are young, as it becomes more expensive and difficult to obtain as we age. If you do not have life insurance coverage, protect your loved ones by getting coverage today. Life insurance is considered one of the cornerstones of sound financial planning.

While life insurance protects your family in the event of your untimely passing, critical illness insurance provides coverage in the event you have a major illness such as a heart attack, stroke, cancer, and other serious ailments that oftentimes require long-term and expensive and extensive medical care. The payout from this type of insurance can help you cover the cost of medical care and family living expenses during this time when you may be unable to work and earn an income. When persons think about getting insurance, they often think of getting life insurance, but critical illness coverage is another key piece of the financial planning puzzle. With the recent experience of the pandemic, more persons have become more conscious of their health, which has given rise to increased demand for critical illness coverage. The last thing you want to have to worry about as you navigate the emotional rollercoaster and ponder your own mortality, if you are diagnosed with a critical illness, is whether you have the funds to help you get the treatment you need. Give yourself and your family one less thing to worry about, get critical illness insurance.

Health Insurance – Medical bills are some of the frequent causes of financial hardship in Jamaica, and having health insurance covers your routine doctor’s visits, pharmaceutical coverage, and basic hospital coverage among other ‘everyday’ medical coverage. Typically, employers provide health insurance cards; however, Minister of Health, Dr Christopher Tufton in 2018 said that only a shocking 20 per cent of the population had health insurance, 11 per cent being government workers and 9 per cent private sector workers. This data indicated that as a country we are woefully underinsured. Nevertheless, if you are not currently part of an employer-sponsored scheme, you can purchase health insurance by contacting health insurance companies directly or going through a health insurance agent or broker. Jamaicans can also benefit from the National Health Fund (NHF), which provides NHF cards to beneficiaries of all ages to treat 22 chronic illnesses, such as epilepsy, diabetes, and rheumatic heart disease. The Jamaica Drug for the Elderly Programme (JADEP), which provides select drugs free of cost to beneficiaries 60 years and over for the treatment of 10 chronic illnesses, and the GOJ card, which provides coverage for vital essential and necessary health services and medication with no out-of-pocket cost, are also available through the NHF.

Lack of or inadequate insurance coverage to protect you and your family in the event of unforeseen circumstances is a major gap in any financial plan that could leave you unprepared in the event of your untimely passing or major illness. The key is to give insurance its rightful place in your wealth building journey by recognising the vital role it plays in the preservation of your wealth, and across generations. In the case of any of the health insurance coverage, or unforeseen eventualities, your savings and investments can be preserved, while the insurance coverage takes care of the financial fallout. In the case of your passing, your life insurance coverage can be used to cover your final expenses with a portion being passed to your loved ones. Additionally, it can be used in estate planning because the insurance payout can be used to cover estate taxes so that your beneficiaries do not have to worry about selling assets to pay the taxes. As you rev the engines to really get the new year and your wealth journey off to a great start, if you have not made insurance part of your financial plan, speak to your financial advisor today. By considering insurance as a part of your overall financial plan, you can have peace of mind and provide a legacy of financial security to your loved ones.