Tips For Insurance: How To Cut Your Costs In Half
Your rate for medical care insurance will, to a very large degree, be determined by the size of the deductible you are willing to take. This means that you will pay more for a no deductible health care insurance policy than you will pay for a high deductible health care insurance contract.
Your rate will be influenced by other insurance-related factors as well. These insurance-related factors include your location, your age, your gender and your health history. However, the insurance-related factors you have the most control over may be the deductible you select when getting a medical insurance contract.
Most adults know that when you get a higher deductible health insurance contract, you will pay less than if you purchase a no deductible health care insurance contract. However, what most don't know is that the increase in deductible is not equal to the decrease in rate.
For this reason a bigger deductible health care insurance plan is often a much better deal when compared to a lower deductible policy. Raising your risk by a dollar often results in a drop in costs of greater than a dollar.
Chances are you can get a health insurance policy very similar to the one you now pay for with a bigger deductible. If that is true, it will be easy to compare your choices.
To determine if you can drop your cost without raising your risk too much, you can use this three-step process. The first step is to calculate the amount you will save each year with the higher deductible policy by subtracting the annual cost of your current health insurance policy from the annual cost of the higher deductible plan. Then determine how much additional risk will take on if you buy the higher deductible plan. Finally deduct the potential cost-savings from amount of the potential additional risk. Call this dollar figure your "net additional risk".
If you want to take on the net additional risk the amount, consider buying the cheaper plan. But before you do so, do the same exercise again. This time compare your current contract with a plan with an even larger deductible health care insurance contract.
Medical care insurance contracts that are compatible with HSAs or Health Savings Accounts are often the most cost effective policies. These plans typically have larger deductibles and low costs. They often will pay for some preventative medical expenses even if you haven't met your deductible.
This cost-saving technique should not only be used to halve your health insurance rates. You should also apply the same process to halve your costs for auto insurance and for your other personal insurance contracts.
Increasing your deductible and cutting your insurance premiums is a proven method for getting your rates down. However, there are two things that you should be aware of.
The first is that it is smart to invest the premiums that you save by dropping your rates. Holding on to this money can help you in two ways. If you have costs that are not covered by your insurance contract, some of this money can be used to cover your costs. If you do not have uninsured medical events, you may more money for retirement.
The second is that a deductible is not the only cost share for health insurance. Often two policies with the same deductible might be radically different. The others are coinsurance and co-pays.
When comparing health insurance policies, it pays to look at all the insurance-related factors involved. Do not focus on the deductibles and forget about the other insurance-related factors.
As the prices for insurance go higher and higher, we have to get smarter and make better decisions. The steps above might help you lower your costs for insurance and improve your financial security.