Asking why insurance companies do what they do is pointless it seems. Asking should you save money if possible? Now that makes sense. Insurance, especially health insurance, can be expensive. Usually in order to keep your deductibles low you pay a higher premium. These premium payments can add up aver time to a considerable sum of money.
Raising your deductible will lower your payment and thus keep more of that hard earned money in your coffers rather than theirs. But it’s a gamble on whether or not you get sick or injured. So let’s crunch some imaginary numbers for an example and see how it works out over a five years period.
Let’s say that you have a nice low one hundred dollar deductible but you pay three hundred dollars per month in premiums. That;s thirty six hundred dollars per year, extrapolated over five years this comes out to eighteen thousand dollars in five years, and you never got sick once. No emergency room visits, no weird rashes or the flu, no anything, just paid eighteen grand for just in case.
Now let’s say that you change to a five hundred dollar deductible and your payments go down fifty dollars per month. That’s only three thousand dollars per year in premium payments, a savings of six hundred dollars. You could have one emergency and pay the five hundred dollar deductible and still be up one hundred dollars for that year.
But say you have two emergencies; paying that five hundred dollar deductible twice in the same year on top of premium payments makes your total for the year four thousand dollars. So let’s compare that scenario to the one hundred dollar deductible costs. If you pay thirty six hundred per year in premium payments and have two emergencies and pay that one hundred dollar deductible twice- then your yearly cost is thirty eight hundred dollars- two hundred dollars cheaper than the higher deductible.
So over the five year period with two emergencies and paying the deductible twice on top of your monthly premiums, the lower deductible with a higher monthly payment actually saves you two hundred dollars. What it comes down to is that you are basically gambling on your health. If you want to have the coverage and you want to keep the costs as low as possible, then you would go with the lower monthly payment and hope you don’t end up having to pay that five hundred dollar deductible.
And if you do have to pay it, hopefully you will have it top pay in the first place. So that brings up another point, is it going to be possible to pay the higher deductible should there be the cause to? For many people paying the extra fifty dollars per month to keep the deductible low is a better idea as the fifty per month isn’t that big of a deal but five hundred may be.
Insurance is a gamble for all parties involved. The companies say they will cover you and they are betting on the odds that you will pay for years and never use it. You in the other hand are betting on that if you do need to use it they will actually pay and in order for them to pay you will have to pay the deductible first. So make that payment as easy as possible.
If you just happen to be wealthy then a five hundred dollar deductible and saving a couple hundred bucks per year isn’t that big of a deal. But for a lot of Americans, unfortunately, it could b a matter of life or death.
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