Having a financial safety net for when your health takes an unexpected turn is quite comforting, especially when your family is relying on you to take care of their needs. But if you have to choose between life insurance and health insurance due to your tight budget, you need to weigh the pros and cons of each carefully.
The fact of the matter is that many people need both types of protection and the best thing you can do, really, is to limit coverage to what you need so you can afford to have both types of coverage. Keep in mind that, whether you buy life insurance or buy health insurance plans, your needs can change dramatically during the various stages in your life. What may seem crucial for a family with small kids may no longer be so important for a retiree.
Health and Life Insurance for Young People
Before the Affordable Care Act was rolled out, many “young invincibles” (people in their 20s and 30s) chose to forgo health insurance. Young people have a lower chance of getting sick than older people, so for some, paying a premium each month didn’t make much sense.
But when the ACA was enacted, people didn’t have much of a choice but to get health insurance because failing to do so would mean paying steep penalties. Fortunately, the ACA allows a young individual to stay on their parents’ plan until the age of 26.
Others also choose to get a catastrophic plan, which covers treatment for major medical issues, after reaching a certain deductible. This is the cheapest health plan available but it does not cover doctor visits and prescription drugs.
Life insurance for “young invincibles” may not be necessary if you do not have kids yet. However, if you’re supporting your parents financially, we recommend that you take out a life insurance policy that’s sufficient to handle their needs if the unforeseen should happen.
Health and Life Insurance for Families
Health insurance becomes increasingly important once you start raising a family. If you’re employed, your company may offer a health plan that is typically cheaper because they subsidize a large portion of the premium. Check all the plans available during your employer’s open employment period and then make an estimate of how much you’ll pay out of pocket under each plan. Sometimes, the most expensive plan may not be worth it especially if you and your family do not have any special medical needs.
Those looking for health plans on the individual market should also evaluate each option. Even a silver plan can give you sufficient coverage and you’ll be paying a lot less than if you go with a platinum plan.
Life insurance is also a must if you have a family who depends on you. Get a term policy, as this kind of plan is cheaper than whole life insurance plans.
Health and Life Insurance for Seniors
As you get older, you’ll realize that you’ll be dealing with more health problems. So our advice is to never skimp on your health insurance. You’re more than likely to encounter all sorts of medical issues when you reach middle age, and especially when you’re in your 60s and 70s. You can get the help of a medical professional to discuss your health care needs before you pick a policy.
Life insurance is a different matter for seniors, however. Although premiums are going to be much higher, you can at least dial back on your coverage because by this time, your kids should already be financially independent from you. But we would not recommend that you drop your coverage completely, especially if you’re still paying a mortgage or are living on a pension. Just take out a smaller policy, to save on monthly premiums.
Ultimately, it’s not about choosing between health insurance and life insurance – even if money is tight! You just need to take the right approach and pay only for the coverage you need.