Martin is a husband and father of two. He is the sole breadwinner in a comfortably middle class family. One night, Martin feels an excruciating pain in his abdomen. His wife rushes him to the hospital and after tests and makeshift treatment, he is diagnosed with pancreatic cancer. His prognosis is approximately six months.
Two months later, Martin is too sick to work. By the time he dies, chemotherapy and other treatments have burned through the family’s savings and left them in terrible debt. His widow is left raising two children with no source of income.
That sounds like a horror story, but it is incredibly common in America. Healthcare costs are many times higher here than anywhere else in the world and many insurance plans only cover the bare minimum. Furthermore, many breadwinners let life insurance policies lapse due to cash flow problems at some point.
The journey from financial comfort to destitution can be quick and brutal for people who have to deal with major illness at the same time. The question is what can you do to be better prepared for it?
America’s insurance industry is far from perfect. However, insurance is what saves people from becoming destitute due to illness. As a breadwinner of a family, where should your money go? Is life insurance more or less important than health insurance? Should you ever get one without the other?
A critical look at life insurance
Life insurance is not a great topic of conversation. After all, you are speaking about your own mortality, and thinking about how your family will get by when you're gone. It is the kind of thing most people try to avoid.
But it is important to take a critical look at the subject. It is relatively easy to find life insurance today. Lemonade’s term life offering (with no medical exam required) offers premiums as low as $9/month to those who qualify. Applying for coverage is easy and 100% digital. .
Life insurance can help provide for your family if you die unexpectedly. It could provide them with the funds they need while figuring out their future. The problem is that in cases of severe illness, the financial damage can occur long before you die.
As with the example above, getting diagnosed with a terminal illness can mean hundreds of thousands of dollars worth of treatment, as well as end-of-life care. During this time, you may not be able to continue working and struggle to continue paying your insurance premiums.
Life insurance is nonetheless important, but without the requisite full-coverage health insurance, you may not be left with the funds to keep paying for it.
A critical look at health insurance
Health insurance does not solve all these problems. While a reasonable health insurance plan may pay for all your treatment, you may find yourself stuck if you can no longer continue working.
For this reason, disability insurance or dread disease cover is becoming popular. This is coverage that pays out funds when you can no longer work, so that you can continue paying the bills.
Unfortunately, there is no easy solution when it comes to health insurance in America. The reality is that those who need it least can afford the best cover, while those who need it most struggle to pay for the bare minimum. Ultimately, it is important to find the best possible health insurance you can afford so that you are not left in the lurch.
Health insurance vs. life insurance
There is no reality in which one type of insurance should come at the expense of the other. Ideally, you should have the best possible health insurance and the best possible life insurance to help secure your family’s future.
But health insurance is non-negotiable. Life insurance means nothing if you leave your family in tremendous debt after paying for treatment for a terminal illness. Even if you have managed to keep paying your premiums, your family may not have much left from your life insurance benefit once the debt is paid off.
The good news is that If you're serious about your family's future, it's a good idea to prioritize both health insurance and life insurance. Both are tremendously important.
