Health insurance and life insurance are two different things, but there’s sometimes confusion as to which should be prioritized. Life insurance pays out when you die, while health insurance pays out when you need medical help. Which one is more important? There are several factors to consider when choosing between these two types of insurance, and this article will help you understand them better so that you can decide which kind of insurance you should get and why.
How much life insurance do you need?
The three most common methods for determining life insurance coverage are: 1) buying enough coverage to replace your current income (the income replacement method), 2) calculating how much you would need to pay off your debts and expenses if you died today, and 3) determining how much it would cost to raise your family until they reached 18 years of age.
How much health insurance do you need?
Deciding how much coverage you should purchase is just as important as choosing your health plan. The amount of money that your plan will cover varies significantly based on many factors, including: whether you smoke, how old you are and whether or not you have chronic conditions. It’s important to weigh each factor in order to determine if more (or less) insurance is needed for yourself and your family.
Why use a health savings account (HSA)?
HSAs allow you to save for out-of-pocket medical expenses, such as deductibles and copays. Funds can roll over from year to year, and unlike with an FSA, there’s no cap on how much you can contribute. Plus, contributions are tax deductible. And if your employer contributes money to your HSA through a Health Reimbursement Arrangement (HRA), all of that is also tax deductible.
Do you buy health insurance with your employer or on your own?
If you work for a large company, chances are you have health insurance. If your employer doesn’t offer coverage, you may be able to buy it through your state’s Affordable Care Act (ACA) marketplace. If either of these options is a better deal than what you currently have, that’s probably where to start.
How should you decide what type of plan to get?
Your unique situation will dictate your ideal plan. But here are some things to consider when choosing between life and health insurance: how old you are, whether you have dependents, your current financial situation, and how easily accessible funds are in case of an emergency. Because life insurance generally has a longer payback period than health insurance (life is more valuable than health), it makes sense for younger people to buy life insurance instead of health insurance.
The bottom line on health insurance and life insurance
when you get sick, you don’t need money. When you die, though, your family might need financial help to go on without you. For that reason, health insurance is more important for many people than life insurance.