If you have decided to get life insurance, you may be confused about how much you will need. Life insurance plans generally start with pay out amounts around $25,000 and go up to hundreds of thousands and even millions of dollars. You don’t want to pay more for monthly premiums than you need to, but you also don’t want to short change your family when they need it most. The following are a few tips to help you figure out how much life insurance you need.
Determine Current Financial Obligations
Outstanding debts, mortgage balances, medical bills, and other obligations may need to be covered by either your life insurance or your estate in the event of your demise. If you want to ensure that your family does not suffer financial hardship or that they receive all of the assets that you intend for them to receive, make sure that your life insurance policy is substantial to cover these obligations and other expenses. Even family heirlooms or estates may be sold to cover obligations if insurance is insufficient.
Anticipate Household Financial Needs
If you have a spouse and/or dependants that count on your income every month, your life insurance policy payout will help them to continue to cover the daily costs of living if you perish. This money may give your spouse the buffer that he or she needs to move, change jobs or obtain a job, or otherwise rearrange finances. The money may also help your children to continue to live comfortably and may even cover the costs of tuition if you prepare for that eventuality.
Calculate Local Burial and Funeral Costs
Final expense costs such as memorial services, plot fees, headstone costs, and burial or cremation services often cost more than individuals anticipate. Before deciding upon a life insurance plan, look into what these services and expenses cost in your area. Keep in mind that your family will have to cover these costs in addition to your obligations and their daily needs and select a policy that will easily cover all of these things. Some people take comfort in purchasing higher than needed plans to help their families.
Consider Final Expense Insurance
If you do not have a spouse or dependants and you have no outstanding debts or obligations, you may wish to purchase final expense insurance instead of life insurance. Final expense insurance is less expensive than life insurance and will cover the wake, casket, flowers, and other final expenses. This type of policy does not provide surviving family members with money for daily expenses, but may be sufficient if there is no one depending on your income.
Selecting health insurance can be extremely confusing, especially if there are a large number of plans to select from. It can be tempting to go with the plan with the lowest monthly premium, but this can end up costing you a lot of money when you actually try to use the insurance. Since the terminology is often what trips individuals up the most when applying for health insurance, the following are some common terms that are used with a little clarification about what it all means.
- Premium – This is the amount of money that the policy holder will pay each month in order to keep the policy active. If the monthly premium is not paid, the policy will lapse.
- Deductible – Deductibles are the amount that must be paid before the insurance company will begin to cover the cost of services. Deductibles may vary widely, but generally have a direct influence on the cost of the premium: low premium=high deductible; high premium=low deductible. Certain services are often covered outside of the deductible, such as preventative care and doctor visits.
- Copay – A copay is the amount that the policyholder is required to pay in order to receive certain services. Copays are usually specified in the details of the policy, as there may be different copays for doctor visits, emergency room visits, and specialist visits.
- Coinsurance – Coinsurance is often assessed as a percentage that is owed for services after the deductible is met. Some plans may offer coinsurance instead of copays for services. The premiums for these plans are generally cheaper than plans with copays, as the out of pocket expenses tend to be higher.
- In-Network – Most insurance plans are only accepted by certain providers. The providers that accept the insurance are considered in-network. If a policyholder goes to a health care provider that is out-of-network, the insurance will not cover the cost of services. Certain exceptions may be made for emergency situations.
- Out of Pocket Maximum – Most health insurance plans will begin covering all medical expenses that exceed a specified out of pocket amount during the course of a covered year. Out of pocket maximums are generally very high for plans with low premiums and lower for plans with higher premiums.
- Waiting Period – If insurance is obtained through an employer, some health insurance providers specify a certain amount of time that the employee must stay with the company before they are eligible for insurance.
Health insurance can be extremely helpful if you are pregnant or are trying to become pregnant. Without health insurance, maternity stays at hospitals can range from about $1,200 to $12,000. This cost is in addition to obstetricians, anesthesiologists, and prenatal care. Health insurance can decrease these costs significantly. If you want to postpone pregnancy or have decided that your family is complete, health insurance can also help with these family planning costs.
Maternity and Birth Control Coverage Is Included
The ACA mandates that all health insurance policies cover maternity care. This is one of the essential benefits that must now be covered by all health insurance plans. Additionally, certain types of birth control are covered by health insurance at no cost to the patient. This can help to avoid unwanted pregnancies.
Prenatal Visits Are Covered
Prenatal doctor visits to check on the health of the mother and the baby are covered under health insurance. During prenatal doctor visits, physicians may perform gestational diabetes screenings, administer blood tests, prescribe medications, perform ultrasounds, and take other actions as needed. These services may be covered in full or in part, based on the policy that is selected.
Birthing Classes May Be Covered
Some health insurance may cover birthing or Lamaze classes. These classes can help mothers learn about breathing techniques and pain management and may include fathers as integral partners throughout the pregnancy and delivery. Classes may also provide education about proper diet, exercise as it relates to pregnancy, and may offer parents a chance to ask questions about the birthing process not explored during prenatal visits.
Insurance Helps with Inpatient Services
Inpatient services for delivery and physician assistance are covered by health insurance plans. If complications occur that require a cesarean section or other emergency procedures in order to preserve the health of the mother and child, the out-of-pocket cost of these procedures may be mitigated significantly by health insurance. In some cases, this may enable mothers to receive better care than they would have otherwise been able to afford.
After a baby is born, well baby check-ups can help to ensure that the baby stays healthy. Visits can help physicians to catch any existing health issues in early stages, which may prevent life-long problems in some cases. Insurance covers these services and may also cover immunizations and other preventative care. If a mother does not have health insurance when a baby is born, the birth of the baby makes the family eligible for a special enrollment period.