Managing your money after being diagnosed with a serious or terminal illness

Your borrowing options to cover treatment costs

Taking out loans to support your income

If you are going through treatment and need some extra cash, but don’t qualify for any government assistance, personal loans can offer a way to help you make ends meet in the short-term.

It's important you don't rack up debt on credit cards or go to short-term lenders. While they may look like an easy option, the interest can be crippling, landing you in a worse situation financially.

As with all debt, you will need to be confident that you can repay it without damaging your future financial state. It can be challenging to think in the long-term in the face of a serious illness, so we recommend discussing the option with a financial advisor.

There are a couple of things you need to think about before borrowing. We also encourage you to read up about personal loans to avoid the common mistakes people make.

Loans from family

During a difficult time, your family might want to help you with some costs. Some may even extend the offer of a loan to cover any big-ticket items.

While this is kind and generous, you need to be careful that both parties have the same expectations for each other. We suggest creating a written agreement that sets out some basic details about the loan – like how often you will make payments and when the payments need to start, whether there is any interest or fees, and whether there is any room for flexibility in case you get sick again or need to delay payments for another reason.

It may also help to approach one of our linked legal resources below to discuss the agreement in detail. This will protect both yourself and the other party, and make sure that the loan is good for both parties.

Refinancing your mortgage

If you own your home and have equity in it, you can consider refinancing (sometimes called ‘remortgaging’) and get a lump sum loan to finance treatment costs. The same way as you would refinance to renovate your kitchen, you can also refinance to secure relatively low-interest loans.

Not everyone will be able to do this, and not everyone will want to. This option would mean a larger outstanding loan balance whenever you are able to begin making repayments again.

For example, if your home is worth $500,000 and your mortgage is $100,000, you have $400,000 of equity. If you refinanced to get a one-off payment of $150,000 to pay for any treatment costs or other expenses, your mortgage would then become $250,000.

Since your repayments will increase, the bank will need to make an assessment of what you can reasonably afford to pay. So having equity alone will not mean this option will be available.

Refinancing is generally preferable to a personal loan because mortgages tend to have lower interest rates than personal loans, meaning you spend less money on interest payments. Here’s our guide on how to refinance your mortgage.

Reverse mortgages

If you own your home and are mortgage free, you may be able to borrow money using you home as a security in a reverse mortgage (also known as a home equity release). The bank will be able to get its money back when the house is sold, either when you move on to managed care or when you pass.

You will need to be over 60 before you can apply, and you can only borrow a percentage of your home’s value. Reverse mortgages typically come with a lifetime occupancy guarantee, meaning that you will have the right to live in your home for as long as you choose.

For a detailed explanation of reverse mortgages, see this article from Consumer and this guide from MoneyHub.

Your options and rights for housing

Renters

If you are renting or a boarder, a serious illness may cause you to change your living situation.

If you would like to stay in your rental home during treatment but can’t pay rent how you usually would, contact your landlord and talk about options for changing the ways you pay rent during the treatment period.

You may want to explain your diagnosis, the duration of treatment, and the timing of any income you might receive during this time. Are you getting a lump sum insurance payout? Regular payments from your insurer? An accommodation supplement through Work and Income?

Your landlord may be able to accommodate you paying rent on a different timeline to how you were paying before – for example, in a lump sum in a month’s time; weekly, fortnightly, or monthly, depending on when your income is credited into your account, etc.

As long as you can pay rent, your landlord should not have any reason to end your tenancy unless something changes for the landlord themselves, such as selling the house or their own family needing to use it in an emergency.

If you would like to leave your rental and seek other options such as living with family, you’ll need to look into the type of lease you have and what is required for giving notice.

If a solution can’t be found – whether with changing your rental payments or leaving your tenancy – contact Tenancy Services.

If you do need to appeal to the Tenancy Tribunal, there are accessible legal resources available. You can approach Citizen’s Advice Bureau and ask for help with understanding your lease, or with next steps in resolving a conflict with your landlord.

Kainga Ora and MSD tenants

If you are a tenant in a Kainga Ora home, a change in circumstances that affects your income will need to be talked through with the Ministry of Social Development. Like tenants in private rentals, you will have a tenancy agreement with Kainga Ora that describes how you or Kainga Ora can end the tenancy if things change.

Homeowners

If you own your home and it is mortgaged through a bank, there are ways you can adjust repayments to accommodate your reduced income during treatment. Get in touch with your bank to see what is available to you.

If your home is currently mortgaged, you may want to consider talking to the bank about your options. In some circumstance, banks can offer options such as a mortgage deferral or pay interest-only for a few months.

Review what insurance you have

Life insurance

If you have a life insurance policy and receive a serious or terminal diagnosis, you may be able to claim a lump sum portion of the policy on diagnosis to finance treatment or recovery. Not all life insurance policies have the same features, and you will need to contact your insurer to determine what you may be entitled to.

Life insurance

Talk to your insurer or insurance adviser

If you bought insurance through a broker or financial adviser specialising in insurance, they should be able to work your claim through with your insurer. Good insurance advisers specialise in getting claims paid.

If you’re speaking to your insurer directly, it will help to

Describe your diagnosis in detail – is it treatable or terminal? Advanced, and requires extensive and long treatment, or less advanced and with a shorter treatment course? Are you likely to be out of work? If so, for how long?
Ask what evidence you will need to submit alongside your claim (if any). Once your insurer has a clear picture of your situation, you can ask them to talk you through what you may be able to claim.

Be prepared to follow-up with your insurer after a claim

If you have lodged a claim with your insurer, they may require you to provide evidence of the illness or to be assessed by a medical professional. You may then be periodically re-assessed for as long as you continue being ‘on-claim’ (or receiving payments from your insurer).

If you want to make sure your insurance adviser is being accurate, you can also check your policy document in detail, either by yourself or with the help of a legal professional.

If you need to lodge a complaint about your insurer, you can do so through Ombudsman New Zealand.

Legal resources for when you have a serious illness

A serious illness can raise a lot of question marks about any existing contracts or arrangements you have, including housing, employment, visas, custody arrangements etc. A lawyer can help you answer those questions and clarify what you’re required to do and what your rights are. Here’s how to find a private lawyer or free legal help.

Finding a private lawyer

Private lawyers usually work for law firms and offer their services on an hourly basis. If you decide to engage a lawyer, the ‘clock’ will start from when you agree to use their services. If you are unsure, you can always ask them at what point they will begin charging you.

Private lawyers can be a good option if you need a lot of hands-on support, and they can guide you through your specific situation in detail. If you are considering engaging a private lawyer, the New Zealand Law Society has a register of lawyers sorted by specialisation (e.g. family law).

Finding free legal help

Organisations like Community Law, Citizen’s Advice Bureau and Youth Law offer free legal help to people who for one reason or another don’t want to engage private lawyers. Both Community and Youth Law sometimes offer legal representation to people who otherwise may not be able to afford it. Youth Law focus on anyone under 25, while Community Law and Citizen’s Advice Bureau are open to everyone.

What to say when seeking legal help

If you are getting in touch with either a private lawyer or a community organisation, it can seem daunting, but your opening doesn’t need to be overly formal. Key to include are:

An introduction – “Hi! My name is Aliyah, and I am getting in touch because I need legal help.”
A clear description of what you need – “I have recently been diagnosed with cancer and my landlord will not agree to allow me to exit my lease. Is there anything I can do to exit?” or “I am on a work visa and have been diagnosed with cancer, what are my options for extending the visa?”
Your contacts – “My phone number is 111-111-111 and you can also reach me at this email.”

Here are our guides on family trusts, wills and enduring powers of attorney.

What to do if your illness is terminal

Propose someone to take over your accounts and products.

If you have bank accounts, credit cards or other bank products like personal loans, it’s important to let your bank know about your diagnosis and propose someone who will inherit these accounts and products after you’re gone.

Often, a bank account will have a signatory or several, meaning that access to the account is restricted. Sorting out whether the signatories are still the correct people is important.

Pass on your passwords.

As we spend more time online, it becomes more important for us to make sure that someone inherits any of our online accounts and the information in them. Leaving these passwords and details with someone can really help the people you leave behind.

For example, consider leaving the passwords to any social media accounts like Facebook. Some social media platforms have special settings you can access to let them know who to pass the account on to in case of your passing (a 'legacy contact'). Here's an example for Facebook.

The exception to this rule concerns passwords to any of your bank accounts, including KiwiSaver and investment accounts. Never share the passwords to your financial accounts with others.

Put your will in place.

Writing a will helps you make sure that after your passing your possessions are divided the way you want. It is your chance to explicitly provide for any children, friends, relatives, or organisations you want.

Wills are legal documents, so you will need to get some legal help with writing and signing your will. There are some online platforms which help you build a will for free or for a small fee, or you can ask around and see if any lawyers would be willing to help.

Set your enduring powers of attorney.

EPAs allow other people to make decisions for us. If you’d like to set up an EPA, you will need to get legal advice. There are two types of enduring powers of attorney – personal and property.

For personal EPAs, it can only be one person at a time. This can be a friend, family member, or someone you feel has your best interest at heart.

For property EPAs you can appoint multiple people or a trust. EPAs are usually established as part of a will, but you can set them up separately as well.

In-person support when you have a serious or terminal illness

If this guide or any other material you find is challenging to understand, there is personalised help available.

Depending on your hospital there may be an on-site social worker who might be able to help you figure out next steps. You can ask your doctor, nurse, or reception if this is something that is on offer.

You may also be able to get in touch with your WINZ or Ministry of Social Development case worker face to face.

Otherwise, you can also approach Citizen’s Advice Bureau and ask for help with translating or understanding any paperwork.

For caregivers of those who are seriously or terminally ill

If you are caring for someone who is seriously or terminally ill, you might have to step in and help them from time to time, even if you are not legally empowered to be their attorney.

In some cases, this can work, but you will typically only be able to get some general information for them. When involving a bank, an insurance company, or any other third party, the person who is the account holder or policyholder will need to be there for the conversation, unless you have enduring power of attorney (EPA).

If the person you are caring for has not arranged for an EPA, then applications will need to be made to the family court for someone to be formally appointed. The costs can far outweigh those of setting up an EPA. We recommend that you seek legal advice from any of the resources listed above.

For example, you can set up a time to talk face-to-face with the bank, but the person you’re caring for must attend as well. You can engage a lawyer, but the person you’re caring for must attend the meeting and make all the decisions. You can take notes for them and ask questions, but you won’t be able to speak on their behalf.

Serious diagnosis FAQs

I have just been diagnosed with a serious illness, and I’m worried about paying my bills. How can I keep my lights on?

Check out the above section on ‘Paying your bills when you have a serious illness’. Most companies will be prepared to work with you to help manage essential expenses during a time of serious illness. If you have any trouble, you’ll also find linked affordable and free legal resources.

I am sick and need help from my landlord or employer, but I am struggling to make sense of my lease or contract. Where can I find help?

With a lease, your first point of contact should be your landlord or property manager. They should be able to talk you through the details of your lease. For a general overview, see the above section on ‘Tips for renters when you have a serious illness’.

With an employment contract, your first point of contact should be your Human Resources department or your manager. For a general overview, see the above section on ‘Talking to your employer’.

If you can’t resolve your issue with your employer, you’ll find linked affordable and free legal resources.

A member of my whānau was just diagnosed with a serious illness. What are my options as far as time off and financial support?

As a caregiver, you may be eligible for many of the same support available to people who have been diagnosed themselves. Whether you are renting, boarding, or own your home, all the resources we have set out will still apply.

Similarly, your employer should make the same accommodations for you as a caregiver that they would if you were sick yourself.

The only point of difference could be your ability to make legal and medical decisions on behalf of your child. If you are their legal guardian, you will be able to decide on their behalf. If you are not their legal guardian, we recommend approaching any one of the legal resources we have listed.

I have just been diagnosed with a serious illness and have a lot of debt. I am worried about going further into debt while I am sick. What can I do?

It can be tricky to balance concerns about your physical health with concerns about your financial health. To start, see the above section on ‘Managing your debt’.

Depending on your financial situation, you may also need to borrow money during your treatment or recovery. You’ll find information about the different types of debt, how to pay it off faster, and where to get loans in the above section ‘Paying your bills when you have a serious illness’.

What kind of support am I eligible for now I have a serious illness?

If you have one, your first point of contact should be your MSD case manager. If you don’t yet have a case manager and aren’t receiving any government benefits, head over to the Ministry of Social Development website and figure out if you are eligible for any support.

There are also these charitable organisations who may be able to help:

Family Services
Ministry of Social Development
Salvation Army, particularly their community finance loans.

What should I say to my landlord, bank, or employer after receiving a serious illness diagnosis?

You should start by explaining your diagnosis, what this means for you in relation to your finances or ability to work, and what your ideal outcome would be. Then you can work together to find a suitable solution. You’ll find more specifics above.

I haven’t been able to get the support I need from my bank, landlord, or employer. What are my rights and where can I find support?

If you’ve exhausted your options working directly with your bank, landlord or employer, you can get free advice on your rights. Here’s our guide on knowing your rights.