Financial Planning for End-Of-Life Contingencies
Recently, I wrote about the need to have insurance after 65. It’s not really about age 65 but the need to have insurance for as long as we live. I once read a book “55 reasons why people buy insurance” and while it’s a cheap and cheerful read for a financial planner, I don’t recommend it for public consumption. Not many will need to learn about how insurance can help you be remembered by your grandchildren or enhance “marriage-ability”.
At the end of the article, I promised to follow up with some reasons on why people will need and want insurance after 65. Before I started work on the project, a report on 3rd Apr in the Straits Times caught my attention. The title is “Cancer patients prefer to die at home than extend life”.
In a recent study, it was found that patients would rather pay more to die at home than spend on treatments to extend their lives or avoid severe pain. About a third is willing to sacrifice quality of care and amount of care in exchange for being able to die at home. Intuitively, I agree with the findings and I’m sure many of you will as well.
The research team said that “the healthcare system currently focuses a lot on extending life” and physicians often offer life-extending treatments, for which health insurance is typically drawn up to help finance. Yet, when the results were quantified, patients were only willing to pay up to $18,600 a year to extend their lives by a year compared with $31,000 to die at home.
It makes interesting reading for me, a financial planner. I don’t see it as something that affects terminally ill cancer patients, I see it as something that affects us all as human beings. If the study represents accurately how we really feel when it comes to end-of-life decisions, what can this mean to us?
How do we plan? Can we ignore it and take a “que sera” approach? Is medical and hospitalization insurance alone sufficient? How do we ensure our dignity and wishes are respected?
Besides being a financial planner, I am a Singaporean and part of the “sandwich population”. I have parents to care for and toddlers to torture…me. Financially, I am too rich to be poor and too poor to be rich. Think thin patty and thick bread.
I have a lot of clients and friends who are just like me. One day, we will be in the position of caregiving and a bit further down the road, be cared for. In between the daily grind of work, parents, kids, clients and for me, football, I have neither the time nor motivation to really think about what do I want for the last 12 months of my life. Neither should anyone else.
In the article, the study team highlights the culture here where unlike the west, caregivers makes these important end of life decisions for their loved ones. If we don’t plan, decisions will still be made. It’s just that the decisions taken may not be something we really want.
So, what’s the point?
The study team points out that they hope the research can help foster greater communication between patients, caregivers and doctors. Decision aids such as specially designed questionnaires can be created to help convey better understanding. In my opinion, there is still a missing piece – the financial aspect.
Unfortunately, financial preparation cannot be planned at the last minute using a decision aid. The financial planning must be done well before so that it can help and not hinder the decision making process. I think part of the planning requires communication and another part involves insurance.
That’s where you should make your financial planner a part of your team. As someone who handles your insurance matters and is prepared to communicate your financial plans to your family, he or she is a very good resource.
Here is my suggestion. Set up an annual “Contingency Day” with your loved ones. On that day, freshen up all your financial statements, review your insurance plans and most importantly, communicate to each other about contingencies expectations including end-of-life. Bring your financial planner in as a trusted third party. Tell him or her the expectations and ask that they be provided for financially.
Perhaps, this planning alone will be one very good reason to have whole-of-life insurance.
Article by Lee Meng Choe, FChFP
P.S. We have a 5 point checklist for End-Of-Life Contingency Planning that you may find useful in helping to guide you through the thinking process.
Ask your GEN Planner for a copy or alternately, you can request for it here.