Tag: insurance

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Financial Insurance

Reduce, Pause, or Cancel Your Car Insurance

Reduce, Pause, or Cancel Your Car Insurance

In some cases, you might want to pause or cancel your car insurance on a car you aren’t actively using. It can be a great way to cut down on costs for a few months and save money that could be better used in another area of your life.

Some car insurance companies will allow you to suspend the car insurance for a few months while in others you will need to cancel it completely. It’s a common way for people to save money when they are having a financial hardship. Many companies will be lenient if you explain to them the situation and tell them it’s for economic reasons.

Most car insurance companies will make you call or appear in an office to pause or cancel your plan. This is for security purposes because they want to ensure that you are the one canceling the plan and not someone else.

Reducing Your Plan

This involves minimizing your plan to only pay for the car insurance parts that are required by your state. It’s called a minimum coverage option. Most states require you to have liability insurance, personal injury protection, and medical payments coverage.

You might want to also keep comprehensive coverage if you are storing the vehicle. This will make sure that the car is covered if it is stolen or is damaged from falling objects. It will also protect the car from vandalism.

Make sure to contact the DMV if you only have comprehensive coverage and not liability coverage. This way they know no one is driving the car and you only have insurance to protect it from non-driving damage.

They will usually make you file an affidavit so that it’s on file somewhere that no one will be driving the car.

Pausing Your Car Insurance

This allows you to stop paying the car insurance momentarily for a few months while you get your finances together. This allows you to keep from experiencing coverage lapse. It’s also more cost-effective than canceling your insurance and then reapplying for a new one at a later time.

Pausing car insurance is only allowed by some companies and usually under certain circumstances. You will also need to go to the DMV and get an affidavit of non-use. This allows you to legally stop paying car insurance while you are not driving the car.

This isn’t usually an option if you have a car loan. Lenders almost always require you to have coverage but check your agreement to see the specific protocols.

Canceling Your Plan

This will also not work if you have a car loan. Canceling completely ends your insurance. If you decide to start driving again, you will need to look for a new policy and resign a plan.

This also requires a DMV visit to receive a form to say you will not be driving the car. This will create a lapse in your insurance history and might may your insurance more expensive when you begin to drive again.

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Financial Insurance

The Best Renter’s Insurance Companies

The Best Renter's Insurance Companies

Finding good renter’s insurance is always an amazing idea if you are renting a home or apartment. In some lease agreements, it is even required. Make sure to check your lease agreement and see what stipulations are laid out.

There are so many renters’ insurance companies that it can be difficult to find the right one. The best company will depend on your possessions and where you live. Always remember to shop around for quotes and coverage options.

Bundling insurance can also be cheaper. So, if you have car insurance, see if your company also offers renters’ insurance. It could save you more money than using a new company that doesn’t know you.

State Farm

Everyone has heard of State Farm because they are one of the largest car insurance companies. They offer huge discounts if you want to bundle. They also give discounts if your place of residence has certain security features such as burglar alarms, smoke detectors, and other devices.

You can also easily find a quote online if you don’t want to call someone or wait on the phone. Like their car insurance, they offer great deals and plans for your home or apartment.

Amica

Amica has some very affordable options. You can also receive a discount if you put your bills on auto-pay and if you have paperless billing. You can also bundle with car insurance for a larger discount. The more years you go without needing to file a claim, the more discounts you will receive.

They also have extra add-in options for things like electronics, valuables, and jewelry. You can track any claims online through the app or the very easy-to-use website. Keep in mind they do not offer options for people who have a residence in Alaska or Hawaii.

Nationwide

Nationwide offers all the basic things you might need in a renter’s insurance plan. They also have policies for credit card coverage and building addition/alteration coverage for no extra cost.

They offer discounts if you also use them for car insurance or have safety features in your home such as smoke detectors. The longer you go being claim-free, the more discounts you will receive.

Nationwide is a very large company with very few customer complaints. This is very rare and shows they have high customer service skills.

USAA

This is one of the best options if you are active military or a veteran. It can also be used by your families and spouses. They also have coverage for floods and earthquakes for no extra cost. They also offer banking and investment products that you can bundle together.

Some other companies to consider are:

  • Travelers
  • Allstate
  • American Family
  • Assurant
  • Auto-Owners
  • Farmers
  • The Hartford
  • Homesite
  • Lemonade
  • Liberty Mutual

What to include in your policy?

Every policy will be different, but some things should always be included:

  • Personal property coverage for belongings
  • Liability insurance coverage for injuries to you or a guest
  • Medical payments coverage
  • Loss of use coverage will pay for hotels or food when needed
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Financial Insurance

Car Insurance: Tips & Ideas for Cutting Costs

Tips & Ideas for Cutting Car Insurance Costs

When you’re behind the wheel, you need car insurance to protect you. But how can you make the liability insurance or car coverage more affordable for you?

Here are some tips and ideas for cutting your car insurance costs:

  • You must remember that insurance companies offer multi-car discounts and make it your goal to take advantage of that. Hence, if you try obtaining a quote from an auto insurance company for a single car, they will surely give you a higher quote.

But if you asked them for quotes for several cars or drivers at one time, you will get a more discounted bulk rate. Do you know why? Because they’re willing to give you a deal if they see promises of more business from you.

You can gather your family members, neighbors, friends etc and then ask for a collective quote.

  • Insurance companies are smarter than you think. They conduct studies to prove that people with good credit scores are less like to make insurance claims. Hence, try paying your bills on time and clearing your credit card debt before purchasing your car insurance. You could win lower premiums this way.
  • Being a safe driver is one easy way to cut car insurance costs. It’s common knowledge that safe drivers are the favorites, especially for car insurance companies. Try to maintain a good driving record and you’ll win safe driving discounts in return on your insurance, almost up to 10% to 23 %.
  • Insurance companies insure different people and cars differently, which is why you will find a difference in thousands of dollars between their quotes. This is why we suggest you first shop around well to see who’s offering what. With three or four quotes in hand, you can settle for the most reasonable one.
  • There are some insurance companies who award discounts to those who undergo defensive driving course. With this course, you can the number of points on your license. You may even opt for accident prevention or similar course to win this discount. Not a bad idea it seems!
  • Bundling your insurances can lower your costs too. You may already be having a homeowner’s insurance or some others and if you wish to purchase more than one policy, it would be a great idea to ask your agent to bundle these. In return, your insurance provider may give you a discount, which they often do on bundle insurances.
  • Using mass transit will shower fewer miles on your insured automobile in year and that is sure to reduce your costs too. You see, it is typical for an insurance company to make you fill a questionnaire before signing up for discounts. If you are commuting for three to four hours daily back and forth from work, you will surely be paying more premiums that those who only drive a mile a day.

Hence, a good idea is to ask your insurance company about their mileage thresholds. That way you can plan your mileage accordingly to win a discount.

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Financial Insurance

How Long Should My Life Insurance Last?

life insurance how long should it last

When shopping for life insurance, you have to make a lot of decisions. One of those decisions is choosing a policy length. Many life insurance providers offer coverage until your death or for a set period. In order to choose the best life insurance policy length for your needs, you must consider three things:

  • The Amount of Coverage You Need
  • Your Budget
  • How Much You Qualify for Based on Age and Income

Life Insurance Lengths

Once you select the amount of coverage you need for your life insurance policy, you must start to consider all of the options you have for the length of coverage. As we mentioned earlier, different companies offer different lengths. You may find one company that offers permanent life insurance, which covers you until death. Some permanent policies max out at 100 years, however.

Other Insurance providers offer term life insurance, which provides you with coverage for a set term. Most of these term policies are good for 10, 20, or 30 years. You may see some that offer other increments of five or 10 years. In fact, some offer up to 35 or 40 years of coverage.

How to Calculate Your Life Insurance Coverage Length

With all of the different term options, it can be difficult to choose a length for your policy. Therefore, it’s important that you remember why you are getting the policy. Life insurance is designed to pay death benefits to your beneficiaries if you die during its term. These death benefits protect your family from financial burdens resulting from your death.

What kind of financial burdens are we talking about?

Mortgages, bills, and every day costs of living don’t stop just because you die. If your income contributed to your household, life insurance makes sure that surviving members of your family can continue to pay for their lifestyle. It also ensures that a roof stays over their heads by paying off a mortgage completely or contributing to monthly payments.

With that in mind, you can better calculate the length of life insurance coverage that you’ll need. New parents may want 20 to 30 years of coverage to cover the length of time that you’ll have children depending on your income. A longer term can also help pay for college!

Homeowners should plan for a policy that covers the length of their mortgage. 30-year terms are the most popular length for that reason. With this coverage, you can have peace of mind knowing that your family won’t lose their home if something happens to you.

Determining Term-Length Eligibility

Even if you decide you need and can afford a certain term length, you don’t have the final say in the matter. Your life insurance provider ultimately determines how long you can be insured. They typically base your eligibility off of your age and income. In most cases, older people have more limits, but there are some companies who are willing to offer their longest term length to older applicants. It’s important that you speak with a life insurance agent to see how many years of coverage you qualify for.

Learn More About Policy Lengths for Life Insurance

Are you interested in learning more about policy lengths and how they affect your life insurance? If so, we recommend that you get in touch with several different providers. Though this guide serves as a basic guideline, they can give you all of the information you need to make an informed decision for you and your family.  

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Financial Insurance

Life Insurance Policies You Need to Know

life insurance policies

When you start shopping for life insurance, you’ll quickly notice that policies fall under one of the two main categories: whole life insurance or term life insurance. However, there are many other subcategories that stem from those two. As a result, there are several different options from which you can choose.

In our article on the basics of life insurance, we touched on some of the different types. This guide goes deeper into explaining the different types of policies, which include:

  • Term
  • Whole
  • Universal
  • Variable
  • Variable Universal
  • Indexed Universal
  • Final Expense
  • Group

Term Life Insurance

A term policy provides you with death benefits for a set number of years. Death benefits are only payed to your beneficiaries if you die within the term. For that reason, this policy type is often the most affordable and simplest policy to get. However, you’ll have to shop for a new policy every time the term expires, so it can create more work in the long run. It can also leave you with higher premiums as you age.

Whole Life Insurance

If you want to stick with one life insurance policy, then a whole policy is the best option for you. It never expires, so you can keep it for as long as necessary. Though it can be up to 15 times more expensive than its term counterparts, whole policies build a cash value that you can withdraw, invest, or borrow against.

Universal Life Insurance

Universal policies also have a cash value. Your premiums contribute to both the cash value and death benefits, but unlike whole, you can change your policy without having to cancel and get a new one. In fact, you can change the premium and death benefit amounts as long as you maintain the minimum premium. Many policies allow you to use your cash value to pay the premium, so you could someday find yourself in a position where you won’t have to pay premiums out of pocket.

Indexed Universal

Indexed universal plans are a variant of the standard universal plan. With an indexed universal policy, your cash value interest rates are based on the performance of a specific group of investments, also known as an index. You never have to worry about losing money, though. IUL policies have a minimum guaranteed interest rate.

Variable Life Insurance

A variable life insurance policy is very similar to an IUL, but instead of having an indexed interest rate, it is variable. That means there is more risk involved, but you could also see a lot of growth. It’s easier to understand how these policies work if you view its cash value as an investment option.

Variable Universal Life Insurance

If you choose variable universal life insurance, you’ll see that it’s very similar to both a universal policy and a variable policy. Variable allows you to adjust your premium and death benefit amounts while also investing its cash value. It’s the best of both worlds, but it is one of the more complex policies to understand.

Final Expense Insurance

Older people without life insurance may find final expense insurance to be a good fit. This policy is designed to cover any end of life expenses, such as a funeral, cremation, or medical care costs. It’s very expensive compared to the coverage it provides, so it should only be considered by people who don’t have enough savings to cover these costs.

Group Life Insurance

Some employers offer group life insurance at no cost to you. In these cases, it’s a great benefit, but keep in mind that it may not provide you with enough coverage for your family.

Find Out More

Now that you know more about the different types of life insurance, you should be better prepared to make a decision about your policy. However, we still encourage you to speak with an agent to find out which policy type is the best option for you and your needs.

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Financial Insurance

Health Insurance: The 101 Guide

health insurance guide

Health insurance is a necessary product that provides you with coverage when faced with medical expenses. No matter your age or current health status, you need to have a health insurance plan in case you get sick or injured.

However, it can be difficult to find the best health insurance when you don’t understand it. There are so many complicated terms and coverage options, but you can learn more and make an informed decision with this health insurance guide.

Types of Health Insurance

Health insurance is broken into two main categories: public and private. Public insurance includes Medicaid, Medicare, and CHIP. The majority of people have private health insurance. An employee typically provides it, or you can purchase it through a marketplace.

Private health insurance can then be broken up even further:

  • On-Exchange: Private policies sold through government exchanges must cover the ten essential benefits and any other features required by your state. The insurer must offer plans at every metal tier. If you purchase one of these policies, you are eligible for tax credits and cost-sharing reductions.
  • Off-Exchange: You can you buy a plan directly from a health insurance provider, privately-run market, or third-party broker. No matter where you get it, the plans are still required to offer the ten essential benefits. Unfortunately, you cannot get any subsidies, but they can often provide more options at lower prices.
  • Employer-Provided: When your employer purchases and manages your insurance, it is part of a group plan. Again, it must follow the rules and offer the ten essential benefits, but you can usually get these plans at lower prices because of the group discount. With employer-provided plans, you don’t have the burden of searching the market for your own insurance.

Types of Private Insurance Plans

Aside from where you get your private insurance, you also need to consider the type of policy that best fits your needs.

Health Maintenance Organization (HMO)

HMO insurance plans restrict you to a selected network of providers, and you don’t get any coverage outside of your network. All of your care and referrals must be coordinated by an in-network primary care physician. Some people find them to be too restrictive, but they offer lower premiums based on deals they have with their network of healthcare professionals.

Preferred Provider Organization (PPO)

If you need more flexibility with your insurance, a PPO lets you choose between in-network or out-of-network providers. Costs will be lower for in-network care, though. You also have the option of seeing specialists without a referral. The flexibility comes at a price, so you can expect higher premiums with this plan.

Exclusive Provider Organization (EPO)

For a mix of the PPO and HMO, get an EPO. These plans still allow you to see a specialist without a referral, but you can’t seek care from out-of-network providers. Because of this, EPO premiums tend to fall in between HMOs and PPOs.

Point of Service (POS)

A POS plan is also a mix between PPO and HMO. You have a primary care provider coordinating your care, but you also have access to out-of-network options! With this plan, in-network care is more affordable, but you need a referral for in-network specialists.

Metal Tiers from Which You Can Choose

As we mentioned with the on-exchange insurance, you have plans at every metal tier, but what is a metal tier? They are simply categories based on how much you pay versus how much your insurer pays:

  • Platinum: 10% consumer & 90% insurance company
  • Gold: 20% consumer & 80% insurance company
  • Silver: 30% consumer & 70% insurance company
  • Bronze: 40% consumer & 60% insurance company

It’s important to note that these numbers don’t show the exact amount of your portion. It is just designed to give you an overall idea of how much you can expect to pay on your medical costs.

Factors that Determine Your Health Insurance Costs

Lastly, you need to know about the other factors that determine your costs so that you can understand your quote. Your out-of-pocket expenses largely depend on your:

  • Premium
  • Deductible
  • Copayment
  • Coinsurance
  • Maximum Out-of-Pocket Expenses

Get Your Health Insurance Quote

Now that you know more about the basics, you can start to find the best health insurance for your needs. If you don’t have an employer-provided plan, we recommend that you start by getting a health insurance quote from several different providers. You can then compare the quotes to find the best policy for your healthcare needs and budget.

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Family Legal Senior Social Security Disability

What is OASDI?

what is OASDI?

OASDI stands for Old Age, Survivors, and Disability Insurance. It is the long-form name of the Social Security benefits in the US. It is the fund that is paid into by the withholdings on your paycheck. Those who may be eligible to collect OASDI include the disabled, retirees, and so on. The overall goal of the program is to replace the income lost to old age, losing a spouse who was the earner.

The program was created as the Social Security Act by President Roosevelt in 1935. With the country in the grips of the Great Depression at the time, people were eager for a safety net, and it has grown incredibly over the years. In the decade following the passage of the act, there were approximately 222,000 recipients of benefits, while at the end of 2020 there were roughly 70 million. The average monthly benefit for these recipients is about $1,500.

Criteria For Collecting OASDI

Payments into the OASDI program are collected by payroll taxes FICA and SECA, which are the Federal Insurance Contributions Act, and the Self-Employed Contributions Act. In order to collect payments from the OASDI program, the recipient must meet certain requirements. For the tax year 2021, the tax rate for Social Security collected via FICA is 6.2%, while those who are self-employed will pay a rate of 12.4%, or double.

To begin old-age payments, those born before 1960 can collect as early as 62 years old. For those born after 1960, however, the retirement age s 67. In some cases, people who qualify can wait until age 70 to begin collecting payments and can collect larger payments as a result. The funds are kept in a pair of trust funds, the Disability Insurance trust, and the ASI trust.

How Are The Payment Are Calculated

Payment amounts for retired workers are determined by the wages of the worker who paid into the program during their working years. Payments to surviving spouses or children of passed or retired workers. Payments for disability are made only to those who can positively prove they cannot participate in gainful employment as well as meet additional requirements.

Qualifying for retirement benefits requires that the worker be fully insured by accumulating quarters, or credits, for coverage. Quarters are gained based on the wages of the earner for a predefined period and are accumulated for roughly each $1500 earned. Yearly quarter earnings are capped at 4, with 40 credits, or about 10 years of work.

When a worker is ready to retire, they will receive payments from the OASDI program that are based on the average of her 35 highest-paid years of work. If there are more than 35 years on record, the lowest years are eliminated from consideration. If the worker decides to retire early, then their work history is evaluated and any years without data are calculated as zeros in the 35-year formula. That 35-year average is what her monthly payments will be a portion of.

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Family Financial Insurance Senior

When Can I Change My Medicare Insurance Plan?

medicare insurance plan

We know that Medicare insurance is complicated. There are restrictions, open enrollment periods, and so many different plans from which you can choose. It’s easy to find yourself with one hundred different questions.

One of the most common questions we see is, “when can I change my Medicare supplement insurance plan? While we’d like to say the answer is simple, much like Medicare, it’s complicated. In this guide, however, you’ll learn more about when you can change your supplement plans and how to do it.  

What are Medicare Supplement plans?

It is important that you understand the difference between your Medicare insurance and Your Medicare Supplement plan. Your Medicare plan is provided by the government, but a Medicare Supplement Plan is a private health insurance policy.

The purpose of a Supplement plan is to supplement the coverage you get with your original Part A or Part B Medicare plan. For a monthly payment, Medicare Supplement plans usually cover your coinsurance, deductible, and copays. They help to fill in the gaps that you would otherwise be required to pay out of pocket. For that reason, they are sometimes referred to as Medigap insurance plans.

When Can I Change My Plans?

The simple answer is that you can change your Medicare Supplement plan anytime, but of course, there’s a catch. Since supplements are private health insurance policies, the insurance company can choose to turn you down for health reasons.

Supplements are not the same as your Medicare Part C or D plan. Therefore, they aren’t eligible for changes during the Annual Election Period, which occurs in the fall.

There’s only one time when you can enroll in any supplement without being rejected, and that time is six months after you turn 65 or enroll in Part B, whichever comes later. Once this period passes, you can still apply, but the decision is ultimately up to the provider.  

How Do I Change My Plans?

If you would like to change your Medicare Supplement plan, all you have to do is fill out an application with questions related to your health. Many states also require you to pass a medical underwriting.

What does that mean?

It is the process of examining your medical history in order to determine any risk factors that could affect your health insurance coverage. If you are found to be too much of a risk, the private insurance company can deny you or charge you a higher rate. However, there are also many situations that could be covered under your guaranteed-issue rights.

Reasons to Change Your Insurance

Though the application process isn’t always easy, there are several reasons that seniors choose to switch their Medicare Supplement plans. You should consider changing your plan if you:

  • Found the same plan for less money from a different insurance company
  • Need more benefits than what your plan currently offers
  • Don’t use all of the benefits that you currently have
  • Wish you buy your plan from another insurance provider

Request a Quote for a Medicare Supplement Plan

Your best chance to get the coverage you need is within your one-time enrollment window, but you can change your supplement plan at any time! If this is something you’re interested in, we recommend that you do your research and request a Medicare insurance quote from different companies.

Once you have found your ideal plan, you can start the application process. Many companies offer a “free look period” for 30 days. That means you can take 30 days to decide if your new plan is the best Medicare insurance plan for your needs.

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Financial Insurance

Life Insurance: What You Need to Know

life insurance guide 101

In order to know which life insurance policy is best for you, you must first understand its function. What is life insurance? It is a contract between you and an insurer to provide your beneficiary with death benefits based on your payment of premiums.

Still sounds complicated?

In this guide, you’ll learn all of the basics that you need to understand—no matter your stage of life. Whether you’re shopping for the first time or switching policies, we encourage you to read on to find out more about life insurance 101.

Types of Life Insurance

The two primary types of life insurance are term and permanent. With term insurance, you are covered for a set amount of time. It typically lasts 5-30 years, whereas permanent insurance covers your entire life or up to 100 years old.

For the most part, providers sell term policies with level premiums, so you never have to worry about the rate going up as you get older. However, you may have the option to convert your policy to a permanent insurance after the life insurance term is up. With permanent policies, you can choose between whole life and universal plans. Whole life means that you pay the same premium throughout your entire life while universal life insurance gives you flexible premiums.

The biggest difference between term and permanent policies is the ability to build value. A term plan has no value at the end of the life insurance term, but permanent insurance increases cash or loan value. That means you can withdraw, invest, or even borrow against that value. If that’s a feature that is important to you, a permanent policy would be your best option.

Calculating Life Insurance Rates

Your health and age are two of the biggest factors determining your premium rate. In fact, policies are issued either simplified issue or fully underwritten. The former often comes at a higher price because it is based on simple application questions. The latter typically offers lower rates if you show good health through a thorough medical exam and lab work.

Those aren’t the only factors that insurance companies consider, however. They also base your premium on:

  • Your Gender
  • Family Medical History
  • Location
  • Lifestyle

What Does It Cover?

You might be thinking that if your young and healthy, you don’t need insurance at all, but that’s simply not true. It is especially important for young people with families to get insured. A good life insurance policy can help your loved ones with:

  • Funeral Expenses: Did you know that the average cost of a funeral is over $7,000? Add to that the cost of a cemetery plot, headstone, or vault, and it’s even higher. These high end of life expenses are the biggest life insurance selling points for a majority of people.
  • Replacement Income: If your income plays any role in your household’s finances, you need life insurance. When you leave behind a spouse and young children, it helps them maintain their standard of living.
  • Mortgage Payments: It is also crucial that you have life insurance to cover mortgage payments. Nothing could be worse than losing a loved one and your home all at once. Your insurance policy could help with monthly payments or pay off the remaining balance entirely.

How Much Coverage Do You Need?

The answer largely depends on your family and financial needs. Typically, young married couples with children and single parents need the most coverage for the items we mentioned above. We suggest that you take a look at your mortgage or other loans, the cost of your funeral, and your income to choose an amount that best fits your needs.

On the other hand, empty nesters and retirees typically need fewer death benefits. You may not need life insurance at all if you’ve paid off all of your debts and saved accordingly. A financial advisor can help you determine how much coverage you will need.

Get Your Life Insurance Quote

Every policy is different. What may be best for you could be entirely different from what is best for your neighbor. For that reason, we recommend that you do further research and shop around for the best life insurance quote for your needs. There are plenty of agents and online tools ready to help you choose a life insurance policy.

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Financial Insurance

The Basics of Health Insurance

guide to health insurance

Health insurance is the product you purchase to cover any essential or emergency medical expenses. Much like other insurances, many complicated terms and requirements make health insurance confusing for first-time buyers.

However, you must do your research, so you can make sure you have the right coverage for when you need it most. You don’t want to risk being uninsured or underinsured. To learn more about the basics of health insurance, keep reading this guide!

What Does Health Insurance Cover?

There are many different plans and coverage options available, but the government requires all public and private health insurance policies to cover the basics. These required services are referred to as the 10 health essential benefits, and they include:

  1. Prescription Drugs
  2. Pediatric Services
  3. Emergency Services
  4. Hospitalization
  5. Preventative Services & Chronic Disease Management
  6. Addiction & Mental Health Services
  7. Pregnancy, Maternity, and Newborn Care
  8. Laboratory Services
  9. Ambulatory Patient Services
  10. Rehabilitative & Habilitative Services

You may find that your state requires insurers to offer more essential coverage. It is very rare that you would find a state that restricts these 10 essential services.

Commonly-Used Health Insurance Terms

When you start to compare health insurance plans beyond the essentials, you’ll notice that there are many different terms thrown around. Some plans may offer a high deductible with a low coinsurance rate. Others may vary based on out-of-pocket limits. In order to find the right plan for your needs and budget, you need to know what all of these terms mean.

  • Deductible: The amount of money you must pay before your health insurance starts to cover any of your medical expenses. Your deductible amount resets every year, even if you exceed it the previous year.
  • Copayment: The flat fee you pay for certain services, such as doctor visits and prescription drugs. It’s also referred to as a copay, and you typically pay it regardless of whether you met your deductible or not.
  • Coinsurance: Unlike your flat-fee copay, coinsurance is a percentage of the medical costs you have to pay after reaching your deductible.
  • Out-of-Pocket Limit: This amount is the most that you will be required to pay for your medical costs. Your deductible, copays, and coinsurance all make up your out-of-pocket expenses.

How to Determine the Cost of Health Insurance

Since all of the different factors can vary from plan to plan, you need to know how to calculate your health insurance costs. You shouldn’t compare the premiums alone. Instead, you need to calculate the overall expenses by adding up the five major features of your plan.

Premiums

Your premium is your monthly bill that you pay for health insurance coverage. It’s important to understand that this isn’t the amount you’ll pay for your actual health care services. A low premium often means that you have less coverage, so you should expect to pay more out of your own pocket for your health care expenses. This amount also does not contribute to your deductible or maximum out-of-pocket limit.

Deductibles

Your deductible is the amount that you have to pay before your insurance provider steps in to cover your expenses. A lower premium usually means that you’ll have a higher deductible, so you need to find the balance between what you can afford to pay now versus in an emergency.  

Coinsurance

Once you meet your deductible, your insurer helps to pay for a percentage of your health care expenses. You are still responsible for the other portion until you reach your maximum out-of-pocket limit. However, there are some plans that cover 100% of your expenses after you reach your deductible.

Copayment

Before and after you meet your deductible, you’ll have to pay this flat rate every time you go to the doctor or receive prescription drugs. The amount of your copay depends on your insurance provider and the plan you select. A common copay is around $15 to $25 for a routine visit to an in-network doctor.

Maximum Out-of-Pocket Limit

If you want to know the maximum amount of money that you’ll ever have to pay for health care, you should look at the maximum out-of-pocket limit. Aside from your premiums, every cost contributes to the limit, so you’ll never have to pay more than that amount for your health care expenses. Keep in mind that a higher monthly premium usually gives you a lower maximum limit.

Learn More About Health Insurance

Since payments and plans can vary so much from one provider to another, you should request a health insurance quote from several different companies. We suggest that you speak with each provider to learn more about their coverage options. You can also read some of our other health insurance guides to find out more about how it works.