When Should I Get Health Insurance?
It’s reassuring to know that if your physical health suddenly turns for the worse, you and your family will be financially secure. But both life and health insurance policies each month can be difficult to handle when money is an issue.
When bills start piling up, it really can be extremely tempting to cut one or the other to make ends meet. But, both kinds of insurance fulfill a distinct function and otherwise provide different coverage.
Differences Between Life and Health Insurance
Healthcare expenses like doctor’s appointments, hospitalization, medication, medical examinations, and treatments procedures are covered by health insurance. Health insurance can be government-run, like the USA’s Medicare and Medicaid, or private. But when opting for private health insurance, always compare private health insurance quotes. In the UK, residents get free treatment on the NHS, so you only really need private medical insurance if you prefer not to wait for NHS treatment.
On the other hand, life insurance provides a lump-sum payment to your beneficiaries in the event of your death. This helps to ensure your family’s continued financial security, even if you and the wages you’d have contributed to their benefit are gone.
The premise of life insurance is that the payout should be enough to replace lost future income and settle outstanding expenses. These include burial fees, hospital bills, as well as other debts. Life insurance also helps to finance your children’s college savings accounts and possibly your surviving spouse’s retirement years.
If you’re not sure whether to prioritize paying for health insurance over life insurance, it’s important to remember that insurance needs often vary substantially over one’s lifetime. What is significant to a parent of adolescent children may not be as relevant to a new university graduate or a senior citizen.
Insurance Considerations for Young Adults
Before the Affordable Care Act, many 20- and 30-year-olds in the United States elected to go without healthcare coverage. Nearly 30% of young people below the age of 26 had no healthcare coverage of any kind. It’s easy to understand why: young adults are at a substantially lower risk of health concerns than the rest of the population.
However, with the Affordable Care Act requiring most Americans to have healthcare insurance, this started changing. Young adults may be relieved to learn that the Affordable Care Act permits them to remain on their parents’ health insurance plans until they are 26. Also, in 2019, the Tax Cuts and Jobs Act repealed the Affordable Care Act’s noncompliance penalty.
Even so, when you weigh the benefits of having health insurance versus the relatively negligible costs of some plans, you may decide you want to get it anyway. Even when you’re young and healthy, it’s just a smart decision to have health insurance – at the very minimum, for emergencies.
If the worst happens and you need medical care without the coverage of a health insurance plan, you’re going to be solely responsible for your medical expenses. What’s worse is that some hospitals and healthcare providers in the USA will outright turn you away if you don’t have health insurance.
You don’t have much of a choice when it comes to health insurance, but life insurance is a different story. You might not need it at all if you don’t have any children yet.
Insurance Considerations for New Parents
When children (or even simply a spouse) enter the picture, both healthcare insurance and life insurance take on new significance. If your job provides health coverage, it will often be cheaper than purchasing your health insurance plan. Your employer normally pays for a large portion of your health insurance premium.
In contrast, in the private insurance market, you are responsible for paying the entire cost of the plan. That excludes any tax breaks or subsidies that you may be eligible for.
Insurance Considerations for Empty Nesters
The longer you live, the more likely you are to have serious health problems. As a result, you really can’t afford to cut back on your health insurance starting from middle-age. So, if you’ve somehow reached middle-age without health insurance, you should absolutely consider your options now.
However, one financial advantage to growing older is this. You can feel more comfortable decreasing your life insurance premiums when your children become financially independent adults.
