You purchase health and life insurance policies for a similar reason: to create a safety net for you and your family.
When you buy a health and life insurance combo from the same agent, you often stand to save money. Insurers offer incentives when you purchase two policies simultaneously; you save because you’re giving them more business.
Benefits of a Combo
Save Money
The reason you get a few dollars knocked off the price when you buy two T-shirts instead of just one is the same reason you get a discount when you purchase two different policies from the same insurer. They want you to buy more.
When it comes to clothing, this may not be advantageous. After all, you can only have so many T-shirts! But if you’re in the market for both health and life insurance, why not get them in the same place and save a few bucks?
Simplicity
Between your utilities, credit cards and insurance, you’re probably juggling several payments with different due dates. Buying your health and life insurance together means one less bill or email to manage.
Health Insurance Basics
Three Basic Types of Managed Care:
- Preferred Provider Organization (PPO): The main concept behind a PPO is the network. If you utilize this type of health insurance, you may choose any health care provider from within your network, determined by your policy, or any non-network health care provider. You usually are required to make a co-payment or pay co-insurance. Staying in-network saves you a bundle with PPO!
- Health Maintenance Organization (HMO): Like the PPO, the HMO requires you to make a co-payment to an in-network physician. However, the HMO will not pay for services you receive outside the network. In order to obtain specialty care, you must attain a referral to a specialist from your primary-care physician.
- Point of Service (POS or Open Access HMO): This health insurance plan is similar to the HMO. However, when you need care, you can go out of network. But the POS will reimburse you only 50 to 80 percent and you also may be required to pay co-insurance and a deductible.
Non Managed Care:
- Health Savings Account (HSA): Like the name implies, an HSA is a tax-sheltered savings account for medical expenses only. To be eligible for an HSA, you must purchase a high deductible health plan (HDHP), which is an inexpensive policy with greater out-of-pocket costs. Each year, you may contribute to your HSA up to the deductible amount of your HDHP. An HSA is not considered managed care because you are in control of your health care, using your own money to pay for services. However, any money you don’t use will roll into the next year and upon your retirement, you can withdrawal the money and use it how you wish.
Terms You Should Know
- Premiums: Total monthly or annual policy payment
- Deductible: The amount you must pay before your health insurance plan steps in and begins paying your health care expenses. HMO and POS plans may eliminate this payment when you remain in-network.
- Co-payment: The amount you pay when you receive care. This amount varies depending on your health insurance plan and whether you’ve gone to an in-network provider.
- Co-insurance: Usually a percentage, co-insurance is the part of your health care you pay along with your deductible. Co-insurance is common in the indemnity and PPO plans. In a POS plan, you often will have to pay co-insurance as a penalty for going out of network.
Life Insurance Basics
Term Life Insurance: Term life insurance is more flexible and less expensive than permanent life insurance. It’s best suited for younger families with several dependents, but without the financial means to pay the higher premiums of permanent whole or universal policies.
This type of life insurance lasts only the number of years you elect. However if you choose this term life insurance, make sure it’s annual renewable or convertible; otherwise, it can become quite expensive.
- Level Term: Premiums and coverage are fixed over a certain time period.
- Increasing/Decreasing Term: While premiums stay the same, the amount of coverage increases or decreases over a designated amount of time.
- Renewable Term: Your term life insurance inevitably increases as you age, but your health is less predictable. A renewable term policy allows you to renew your policy without another medical examination.
- Convertible Term: This type of policy works well if you are planning to buy permanent life insurance in the future. It allows you to convert your term policy into a permanent one after a designated amount of time.
Permanent (Cash Value) Life Insurance: The premiums for permanent life insurance are five to ten times as much as for term life insurance. However, permanent life insurance usually covers you for your lifetime and often offers a cash value-you can actually accrue money throughout the life of your policy.
- Traditional Whole Life: If you pay the premiums, this policy won’t expire. Many whole life policies have a cash value, or savings account. Part of your payment goes toward the cost of the insurance and the remainder is put in your cash value savings account. This type of life insurance is intended to cover the higher cost of your premiums as you age.
- Universal Life Insurance: This type of life insurance is the most flexible. As your financial needs change, so can your premiums. As with whole life, universal life has a savings account feature in which part of your premium payments are placed. Once a substantial amount has amassed, you can use all or part of this amount for your future premium payments. However, once the savings get used up, you have to begin paying again or risk losing your life insurance.
- Variable Life Insurance: This type of policy offers a savings account that you can invest in stocks, bonds and mutual funds. Your money grows more quickly than with whole or universal policies, but there is more risk. However, many variable policies guarantee your death benefit won’t fall below a minimum level.
- Variable Universal Life Insurance: This type of life insurance combines the theory of the universal policy and the variable policy. It collects your money in a savings account that can be invested or used to pay future premiums.
A health and life insurance combo can save you time and money. Protect yourself today!