- Health Care, Drugs & Insurance
How To Choose The Right Health Insurance Policy
Which Deductible Is Right For Me?
Understanding which health insurance policy to purchase can be tricky. In this article I’m going to discuss the financial costs and risks. You will be better able to decide what is in your financial best interest.
Let's break it down into terminology you can understand. When looking at purchasing a policy you will find it comes in a variety of deductibles. A deductible is the amount of money you must pay out of pocket before insurance coverage will kick in to cover your claims. You will have options of choosing from deductibles typically ranging from $0 to $5000 dollars. This is an annual deductible, meaning that each year the payment obligation starts over.
If you choose a policy with a low deductible, like $ or $250, or $500 the premium or monthly purchase price that you pay for that policy is high. If you choose a very high deductible like $3000 or $5000 or more, that will dramatically lower your monthly premium cost.
Choosing a lower deductible policy costs more up front, but if you file claims and you have to start paying towards your deductible, you will over all have to pay less out of pocket.
Choosing a higher deductible policy costs less up front, but if you file claims and you have to start paying towards your deductible, you will over all have to pay more out of pocket.
For example a policy with a $1000 deductible costs (sample: for female in her early 40’s with a well know carrier) 333.00 per month. To calculate yearly cost, $333 x 12 = $3999 per year in premiums plus the potential $1000 deductible if you file claims = $4999.
Whereas a policy with a $5000 deductible costs (sample: for female in her early 40’s with a well know carrier) $196 per month. To calculate annual costs, $196 x 12 = $2352 per year in premiums plus the potential $5000 deductible if you file claims = $7352.
So the question you should ask yourself is, ‘Do I take a chance and pay $2352 per year instead of $3999 for premiums?’ You will save $1647 in premiums. If you don’t get sick and file claims, you’ll come out ahead of the game. But, if you get sick and have to pay deductibles, you’ll pay overall $7352 instead of $4999 = $2353 more than if you’d taken the more expensive option of $1000 deductible.
If you have health issues, and you know you’re going to need a lot of medical care it makes sense to purchase a low deductible policy.
If you’re well and have no claims the higher deductible can turn out to be a moneysaving option, but of course no one knows for sure if they’ll get sick.
I hope this has taken some of the mystery out of the decision process for you.