Life can change in a single moment.
Your daily activities can be turned upside down in a single moment. Within an instant, your life can take a drastic turn, and you are focused entirely on your recovery and rehabilitation from your injury. The Stress of Medical Bills, Loss of income, and long-term care needs that your serious accident has imposed upon you can in turn create a tremendous amount of financial stress upon you and your family members. In addition to dealing with all of the stresses of your recovery from your accident, the large amount of Medical Bills that you have will at first put a large financial burden on you.
How do you even begin to regain control when everything feels like it’s shifting at once?
Honestly though, when someone suffers a life-changing injury, their best chance at regaining control of their finances is to give themselves time to get up to speed on the options available to them, to protect their finances while they learn, and then to make decisions with their family and the experts who can advise them.
Assessing the Immediate Financial Landscape
It is said that when a sudden injury or serious accident happens to a person, his or her life changes in a single moment. The financial situation of a person and his or her family is affected seriously in a short period of time after the injury or accident. So, the first step to regain control of the life of a person who has had a life-changing injury or accident is to assess the financial situation immediately after the injury or accident.
Begin to organize the mountain of medical bills that begin to arrive from the hospitals, doctors, and physical therapy centers that are trying to treat you. Almost immediately, begin to organize them by date and then begin to call the various centers to begin to negotiate with the billing centers to see if they can put you on a payment plan. In many cases, the billing centers have various special programs, including “hardship” programs that can minimize your payments. In many cases, they also have special people, such as Patient Advocates, who can speak on your behalf.
It takes time, but it works.
Additionally, try to gather information on all of the possible sources of income, including temporary measures. For example, disability income, paid time off, workers’ compensation and cash reserves.
Reviewing Existing Assets and Policies
Once you have set up immediate safety nets for managing your finances during your time of recovery, you can begin focusing on your long-term financial stability. This will involve reviewing and evaluating all of your current existing financial assets and insurance that you have, including some that may have been put in place many years prior.
For example, a person with a life-changing injury may hold life insurance policies to pay for their dependents, or to pay off their mortgage. However, it may be difficult for them to pay the premium on an older policy, or they may need to access the value in the policy for immediate use to cover the cost of care and to make debt payments.
During the evaluation of existing assets and of the financing of needed care, many policyholders ask the same question:
What is my life insurance policy worth if I sell it?
And that is a fair question to ask.
In addition to determining the cash value of a life insurance policy, a person injured in their prime might consider entering into a life settlement. Essentially, this is when a person with an existing life insurance policy, typically mature, sells that policy to a third party, typically a life settlement company, for a lump sum of money. The life settlement amount is greater than the life insurance cash value but less than the face amount of the policy. Funds received from a life settlement can be used to cover ongoing care needs, to modify a home to better accommodate a disability, or to try to pay off outstanding debts.
As was stated earlier, a life settlement can have many implications, and some of these include tax implications, implications to an individual’s estate plan, and implications to an individual’s public assistance programs. Therefore, it is strongly recommended that an evaluation of a life settlement for cash be conducted by an individual in partnership with their financial advisor, CPA, and/or attorney. This will allow the individual to assess the implications of a life settlement for cash in light of the individual’s overall financial situation.
Adapting Long-Term Financial Goals
Long-term financial goals need to be revised as the individual recovers from their injury and gains greater insight into the long-term effects that the injury will have on their life and finances. The budget that was sufficient for the individual prior to their injury will likely not be sufficient to deal with the increased cost of their care while they are attempting to return to work at less than full capacity.
Budgeting will play a more important role to help everyone to become aware of their priorities and in order to make choices. Prioritizing of the most important expenses and, for the rest of the needed expenses, a temporary reduction of discretionary expenses is needed in order to avoid negative effects on quality of life.
Plans change. And that is okay.
Protect Your Future. In many situations your temporary cash needs will need to be released quickly and structured by your financial advisor for you on an on-going basis, often within days or weeks of settlement, however, your future financial needs can take many forms such as protecting your assets for family members and children that you have with your current or future partner(s), or transferring wealth to grandchildren, etc. Protecting your future financial needs is crucial and must be considered at the same time as releasing cash from your financial resources on an ongoing basis, to help manage your financial affairs on an ongoing basis, in order to help you meet and pay for your financial obligations and commitments on an ongoing basis.
The Power of Collaboration and Support
Financial decisions after a major life change should not be done in isolation. You can involve your family members and adult children in order to construct a team of supporters in order to manage your finances, including your professional advisors, in order to make sure that your short-term and long-term financial goals are being met.
However, managing finances in these trying times can be a task better completed by a financial professional. They can incorporate all the information for you and come up with the best strategy in order to meet your immediate needs while protecting your future family’s interests. By working together as a team, there is no doubt you will be able to get back on your feet in no time and go on to build a solid financial future.
