With all the different insurance options it’s easy to see how people get confused. There are a lot of insurance types so if you find yourself asking “is health insurance more important than life insurance”, you are not alone.
The short answer I would say here is that it depends on where your budget is at and what’s going on for you currently. While most people have a very set budget and no increases, then if you want or need to see doctors soon it would be more beneficial to get health insurance quickly to help lower costs. Having life insurance would still be good to protect against unexpected death to help maintain the standard of living for those left behind. With alternate strategies of investing you may get more use out of life insurance and passive income building that could pay for health care costs.
That answer is as short and specific as I could get in a single long paragraph. Let’s break things down a bit more to help those considering if life insurance is more important than health insurance make some decisions.
How are they different?
Let’s make sure we are viewing the two the same way so there is less confusion surrounding them. Life insurance and health insurance are both unique and different insurance types. Much as car insurance is separate, life and health play very specific different roles from each other.
Life insurance is designed to provide protection to an individual, family, or business from the loss of life. Life insurance policies can be further designed to help protect and grow a portion of your income while alive.
Health insurance on the other hand is designed to help an individual or family reduce their out-of-pocket costs for healthcare needs like doctor visits, surgeries, and other medical concerns.
Is health insurance more important than life insurance?
The answer to this question really comes down to your priorities and where you are personally at with your own finances. The most ideal situation would be to have both life and health insurance but again, where are you at personally?
I commonly hear people ask “where should I start with investing?” to which I answer trim the excess expenses from your finances and get a 6-12 month emergency fund. If you haven’t gotten to that point then you may want to focus on a convertible term insurance policy and a good health insurance plan with the lowest out-of-pocket max, decent deductibles, and other coverage.
If you are at that point then what are you striving to do with your finances? What is your current financial viewpoint? Do you want to build passive income? Do you love the job you are in or want to make changes? These are just some variables that I use to determine how to best assist others in their journey.
Another thing seen a lot in the industry is those of younger ages not getting either because of their good health. If you are young you have the lowest premiums for life insurance you will ever find and the longest time period to build cash value. So from a time standpoint, it’s a big mistake not to get life insurance while young. In addition, you never know what may, could, or will happen to your health. Accidents happen all the time and no one expects it to be them.
Health insurance options
Most states allow children to stay on their parent’s plan until age 26, though in a few states it’s as high as 31. So it’s an option for you to have health insurance and work out some sort of payment arrangement with your parents if you can or want to.
Other health insurance options include employer plans and your state’s marketplace exchange. Employer plans are often more coverage than exchanges, though not always. Depending on your income level they may be more affordable if in lower-income brackets especially. Marketplace plans however have a minimum coverage level so they are still really good.
Marketplace plans have tiers of bronze, silver, gold, or platinum so you can go with the bare minimum or get some really great coverage. In addition to marketplace plans, you can look into what’s called ancillary plans that can be used to complement the marketplace plan. Through 2022 there is a law that removes the income cap on marketplace plans and helps provide more tax credit options for those looking into them.
Medicare may also be an option based on age or disability status or end-stage renal disease. Medicare options are rather diverse so if you are turning 65 and confused, let us know we’ll help you navigate it all.
Lastly, there may be options for you to look into Medicaid, which is state-sponsored health coverage. If you qualify for Medicaid that’s usually for really low income, so it’s basically either Medicaid or marketplace insurance. There is no downside to applying, if denied no big deal just look into marketplace or employer insurance instead.
Life insurance options
While health insurance has pretty strict guidelines as to when you can apply and make changes, life insurance is a totally different story. The types of policies, companies, and options are wide open. In addition, you can apply at any time and potentially have multiple policies depending on your income and life event changes.
This article discusses how to borrow against whole life insurance cash value policies
When deciding what to get for life insurance it’s best to work with an agent and share what your situation is and what your money goals are and have a custom-tailored illustration made.
Definitions can be confusing, check my definition list guide with no fluff, just useful explanations of life insurance jargon.
Things to consider for life and health insurance
Some things to consider though are things like are you taking care of anyone like grandparents, parents, or disabled family members. Are you raising kids? Are you going to have a change in careers or income?
When raising kids there is almost always a use for health insurance, especially with a new child. If taking care of others then life insurance may be helpful in the likely or eventually, their death occurs.
Term insurance policies are easy to apply for and be accepted as long as you are in decent or good health. If you have some questionable health concerns then you can look into no medical exam life insurance for a higher premium. If you get convertible term insurance then down the road you can transition it over to a policy that will last until age 100 or higher.
Another option to consider could be a simple final expanse plan for funeral and burial that you can get for a very modest premium and can last until the inevitable.
Pros and cons of life and health insurance
Pros
Protect you from the unexpected- helping you focus on doing what you need to do instead of worrying about what you cant control.
If something does happen- things are covered give you time to recover and not worry about money
With health insurance, you usually have better options of doctors willing to see you, without collection problems.
Often know what your premiums will be before or during your application process.
Death proceeds from life insurance are tax-free
Cons
Premiums can be costly if the budget is tight
Some health insurance choices have networks so make sure your chosen doctors are covered.
Life insurance has an underwriting process that can take a few weeks to a few months.
Health and life insurance get more expensive as we age, and can be really costly for old age or really sick (check anyway there are usually options that can still help).
Conclusion
Life insurance is protection for loss of life while health insurance is protection against immediate medical concerns. Deciding if health insurance or life insurance is more important is totally up to you and your priorities.
If you would like help determining what life and health insurance are available and how they can help your goals let us know for a personalized illustration.
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