Health insurance is essential to reduce medical expenses and provide a financial safety net. Whether you get it through an employer or the health insurance marketplace, it can help you cover unexpected medical costs and prevent debt.
Like life insurance, it involves a policyholder pledging monthly/yearly payments in exchange for part of their medical fees. However, there are some differences between the two types of insurance.
You’ll be able to afford the medical care you need
A health insurance policy protects you from high medical care and treatment costs. It helps to avoid large medical bills, which can lead to financial hardship and even bankruptcy.
A medical insurance plan generally has an annual out-of-pocket limit that includes your deductible, copays, and coinsurance (but not premiums). Once you reach this limit, the program begins to pay 100% of covered costs for the rest of the year.
For those who don’t get health insurance through their employer, purchasing a plan on the individual marketplace is an option. But it’s important to carefully compare the benefits of each project and choose the one that best fits your needs. You may be able to find better coverage for less money by choosing a “Silver” plan instead of the more expensive “Gold” or “Platinum” plans. And remember, if your health improves during the underwriting process, your premiums can usually be reduced.
You’ll be able to pay off debts
Medical bills can quickly put you into debt unless you have considerable savings or equity in your home. Even with insurance, copays and deductibles can add up to a huge sum difficult for most people to pay off.
Life insurance policies pay a lump sum when you die, which your family can use however they choose. But you can also tap into this money while still alive. This process is called a life settlement and can be used to pay off medical bills, student loans, credit card balances, and mortgages.
If you have a term policy nearing its end, you can convert it into a permanent life insurance plan. It will save you money and prevent you from undergoing medical underwriting. You can then use this money to pay off any outstanding debts and ensure your loved ones won’t be saddled with the financial burden of paying your final expenses.
You’ll be able to provide for your family
Having monetary safeguards is important in a world where many families live paycheck to paycheck. These include life and health insurance. When you have these policies, your family can cover any expenses in the event of an unforeseen accident or illness.
In the case of death, the death benefit from life insurance will help your family cover funeral costs and any debts or obligations you have left behind. Similarly, a health policy will give your loved ones enough money to cover any bills related to a debilitating illness or surgery.
While combining these two types of insurance may be tempting, treating them as separate policies is best. When you do this, you’ll be able to see the unique benefits of each approach and decide which one suits your needs best. These policies have different purposes and serve other functions in your financial portfolio.
You’ll be able to save for retirement.
Many people are lucky enough to work for an employer that offers health and life insurance benefits. However, for those who don’t have the luxury of these perks, it is important to ensure they have the right policies to help them save money for retirement.
Whether through an IRA, SIMPLE IRA, 401(k), or other tax-deferred accounts, people should save as much as possible for retirement. Generally, experts recommend that you aim for 10 to 15% of your salary each year.
Some options can make it more affordable for those concerned about how they will afford the cost of both a health insurance policy and a life insurance policy. For example, some life insurance policies offer accelerated death benefit riders, which can be used to help pay for health care expenses in the event of an early death. However, be aware that doing so will decrease the total death benefit paid to beneficiaries later.