When it comes to Florida health insurance coverage and life insurance, there’s a word that should come to mind. A word often overlooked in the insurance world, mainly because most consumers do not have the knowledge of what to look for.
What does it mean to have efficiency in your insurance coverage? The definition I’d like to use for this article is, “Making every premium dollar go as far as possible, without being over insured.” The concept of efficient insurance coverage is foreign to most consumers because nobody really makes people stop and think about it. People don’t randomly ask themselves, “I wonder… am I getting the most out of my insurance premiums?”. What does it take to determine if you’re investing in your protection efficiently? We’ll start with health insurance and then move on to life insurance.
Efficiency in health insurance has a lot to do with cost and risk sharing, which makes sense considering that’s all that insurance really is – the sharing of risk with an outside entity for a premium. What you’re about to read might shock you. One seemingly helpful benefit in health insurance may very well be causing more harm than good, and when you see what I’m talking about, you’re probably immediately going to disagree. I’m talking about a “Doctor visit Co-Pay” benefit. The concept of a Co-Pay seems to make a lot of sense. Instead of paying the whole bill for a doctor visit, you pay a flat pre-set amount instead, and the insurance company pays for the rest. Sounds good right? In many cases co-pays can be a very good thing. Families with a lot of children, and people with ongoing medical conditions have a GREAT need for co-pays… but that doesn’t apply to everyone.
Consider the following two facts: 1) Co-Pays do NOT apply toward a health insurance deductible or out-of-pocket maximum in most cases and 2) Having Co-Pays on a plan costs money. If health insurance coverage has Co-Pays included in the price of the premium but never get used, it’s not an efficient use of premium dollars. On the same token, if Co-Pays are used heavily but do not apply toward a deductible, the out-of-pocket exposure is still higher which costs the insured more money. Again, not an efficient use of premium dollars for many.
Having efficiency in a life insurance policy is far more complex, and we suggest reading our previous blog post about term life insurance to somewhat familiarize yourself. Since life insurance has widely varying degrees of coverage, options, and flexibility, we won’t go into every small detail today but instead cover some of the basics. Life insurance can be the best or worst investment you will ever make in yourself. Think about it, in a health insurance plan there are certain perks and up-front benefits that you have access to just from owning a plan. In life insurance, there’s a possibility that you will pay thousands of dollars over the course of the policy and never get any kind of return on your investment if you outlive the policy’s term. This is known as term life insurance. On the other hand, life insurance such as Universal Life Insurance and Whole Life Insurance provide a vehicle to accumulate cash value over time at either the current interest rates, or through dividends. Would you rather pay for life insurance that you know you’ll be paid back on, or would you rather pay for life insurance that you may get zero return from? This is essentially the difference between term and permanent life insurance. Granted, there are policy riders and benefits that can help fill in the gaps between term and permanent life insurance, but that’s a conversation you need to have with your insurance broker. No two families have identical needs and situations, and there are enough options and flexibility out there to fit any situation.
Finding the efficiency in health insurance coverage and life insurance is not something you’re supposed to know how to do on your own, and there are MANY things that we did not discuss in today’s blog post. That’s why we make ourselves available as insurance professionals to guide and make sure you’re doing the right thing for you and your family. You may be leaving a lot of money on the table. For more helpful information, feel free to contact a broker to learn more about your options so you can make the most efficient decisions possible in your insurance coverage.