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Financial planning advice for diabetics

The high cost of living with diabetes typically extends beyond healthcare-related costs.

If you’re living with diabetes, it’s likely that your medical expenses are a big line item in your budget. However, the high cost of living with diabetes typically extends beyond healthcare-related costs and can include more expensive life and disability cover, higher out-of-pocket expenses, and the need for higher levels of retirement funding. In this article, we explore a number of financial planning areas that can be uniquely affected as a result of a diabetes diagnosis.

Medical aid and gap cover

While it’s advisable for everyone to belong to a medical aid, those with diabetes may need to pay particular attention to the plan option that they choose to ensure that they can receive maximum benefit from their medical aid and that the benefits provided are aligned with the unique set of healthcare needs they are faced with as a result of their condition.

Most large open schemes have excellent diabetic management programmes that are tailored to provide their diabetic members with the appropriate care and ongoing monitoring. In many instances, however, the lower cost options do not include disease management programmes and diabetic members may need to upgrade their plan option in order to enjoy these benefits.

In addition to the standard set of procedures and consultations available as part of the programme, diabetic members can expect to benefit from much-needed advice and care including biokineticist consultations, nutrition and diet advice, annual supplies of blood glucose test strips, and access to qualified diabetic educators. The programme may also include podiatry and ophthalmology benefits, cover for diabetic home monitoring devices and continuous glucose monitoring sensors.

As Diabetics generally face a greater risk of being hospitalised, it is advisable to choose the most comprehensive hospital plan affordable so as to reduce the out-of-pocket expenses you may be faced with if hospitalised. In addition, it is worth taking out a gap cover policy to help fund the costs of medical expenses that fall beyond what is covered by your hospital plan.

Risk cover

While most insurance companies provide risk cover benefits for those living with diabetes, the fact remains that underwriting is a critical component of securing the cover, keeping in mind that underwriting is done on an individual level based on the unique risks that each applicant presents. Underwriting mechanisms that may be employed include a loading of premiums, the exclusion of ancillary benefits, the offer of accidental cover only, or outright exclusion. As risk cover plays an important role when it comes to ensuring estate liquidity, providing for your loved ones, and mitigating risks while saving for retirement, diabetics should be encouraged to carefully manage their disease so as to ensure they do not put themselves in a position where they are uninsurable.

As part of the underwriting process, insurers will want to gather as much information about your diabetic status, including when you were diagnosed, what type of diabetes you have, and how well you are controlling your illness. Other factors taken into account include your age, smoker status, other health conditions that you suffer from, your weight, and other lifestyle factors. The insurer is likely to send you for a number of medical tests which can include blood tests, a resting and effort ECG, BMI tests, and a cholesterol test.

Once they have gathered sufficient information to make a formal underwriting assessment, the insurer may issue you with a counter-offer that sets out the terms and conditions under which they are prepared to grant you cover. The bottom line is that the better you manage and control your condition, the more favourable underwriting you are likely to receive.

As is evident from the above, it is always more difficult to secure risk cover once you have been diagnosed with an illness which highlights the importance of applying for risk cover while you are young and healthy, even if you don’t necessarily need the full amount of cover. As a priority, everyone should secure an income protection benefit as soon as they begin generating an income. Once you are diagnosed with diabetes, obtaining an income protector may become very challenging and you may be left uninsured and financially vulnerable.

Retirement planning

Diabetics can face a number of healthcare complications including heart disease, stroke, blindness, kidney failure, peripheral vascular disease, and possibly amputations and, when it comes to retirement planning, it is important to factor in the costs of healthcare as you age. With the risks of such complications being higher than in the case of non-sufferers, it is realistic to expect your medical costs in retirement to be relatively higher.

If you suffer from a heart attack, debilitating stroke, vision disorders or amputation, frail care or assisted living may be necessary and, as such, it is advisable to build these costs into your retirement budget. In addition, if complications do arise, it may be necessary to move on to a more comprehensive medical aid which naturally will come at a higher premium. As such, when preparing your retirement plan, make sure that the assumptions you use when accounting for increasing medical costs are stress-tested and robust.

Special savings

Diabetics generally face a number of out-of-pocket healthcare expenses especially if they are proactive about maintaining a healthy lifestyle and managing their disease carefully. The costs of regular check-ups with a podiatrist, dietician consultations, ophthalmology appointments and eye tests, monitoring devices and test strips, blood tests, and general medical check-ups, will typically not all be covered by your medical aid, which means that building an appropriately-sized savings fund for these costs will be imperative.

If you are unable to secure an income protection benefit as a result of your condition, be sure to build extra reserves to tide you over in the event that you are unable to work for a period of time as a result of your illness. Similarly, if diabetes has been excluded from your dread disease cover, you may want to consider building up extra cash reserves to cover costs such as visual aids, medical appliances, or home adaptations that may be required as a result of your illness.

Estate planning

Many diabetics face an increased risk of stroke and heart attack making a living will a document worth putting in place. In terms of a living will, you are able to express your desire to not be kept alive artificially in a vegetative state where there is no hope of recovery. In terms of your living will, you can set out your wish to refuse any medical treatment or care which is designed to keep you alive artificially where, without treatment, death would be inevitable. Remember, the efficacy of a living will depends on your medical practitioner and/or loved ones being aware of its existence so, if you do sign a living will make sure that those who are closest to you know where it is kept.

Keeping your last will and testament up-to-date is important, especially if there has been a significant deterioration in your condition and you haven’t reviewed your will in a while. Personal circumstances and relationships tend to change quicker than we often realise, so make it a habit to review your will often to ensure that it reflects your wishes for the distribution of your assets in the event of your passing.

As mentioned above, life cover can play an important role in creating liquidity in your estate in the event of your death. If your illness has prevented you from putting life cover in place, settling your debt as quickly as possible should be a priority to ensure that your estate is not indebted in the event of your passing.

ADVISOR PROFILE

Craig Torr

Crue Invest (Pty) Ltd

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