Shopping for Supplemental Insurance: 3 Questions to Ask Yourself

Shopping for Supplemental Insurance: 3 Questions to Ask Yourself

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So, you’ve decided to get a supplemental insurance policy. That’s a wise move: The unknowns of health expenses mean that a backup plan can complement your regular insurance policy and help cover the costs of whatever life throws your way. After all, life is unpredictable. It’s not pessimistic to consider the possibility that you’ll get in a car accident, throw out your back or come down with an unexpected illness — it’s smart.

What’s the best supplemental insurance for those moments, the life events nobody wants to think about but should? It depends on your needs, debts, savings and, of course, your comfort level with sudden costs. Consider these factors before you buy.

1. What Kind of Protection Do You Need?

As you shop for the best supplemental insurance plans, you’ll come across different types of policies. To get the most bang for your buck, you’ll need to understand what each of them can do for you and pick the best match based on your needs.

  • Critical illness plans pay cash if you’re diagnosed with certain illnesses, like cancer or a heart condition. People with a family history of diseases might choose these plans if they’re healthy, just in case something happens in the future.
  • Accident plans pay cash if you have an accident or injury. If you’re more prone to injuries — do you spend your weekends wakeboarding? — an accident plan may be best for you.
  • Fixed indemnity plans, or hospital indemnity plans, give a fixed payout to help cover your existing insurance’s deductible and other costs if you have an accident or illness. They’re similar to critical illness or accident plans, but they may have different coverage limitations.
  • Short-term health insurance provides medical coverage outside of the government’s enrollment period. These aren’t full plans by current federal standards and may not cover preexisting conditions, but they make good interim solutions when you need them, for example if you’re between jobs.

For all plans, ask your broker or insurance company exactly what each policy will and won’t cover, when they pay out, what you can use the payouts for (like rent or prescriptions), how often premiums change and how much they’ll pay for each type of incident. And compare each plan against what your primary health insurance covers in order to avoid paying for unnecessary overlap.

2. What’s Your Savings and Debt Situation?

If you’ve got a giant stash of cash and few debts, you can likely cover the cost of high deductibles, copays, coinsurance and lost wages. The problem is, that doesn’t describe many people under the age of 35 — hello, student loans and mortgages! For them, health bills can take a toll on their financial security.

If that sounds like you, look for a supplemental plan that covers a wide variety of events with fewer limitations. In this situation, a fixed indemnity plan might offer the right kind of safety net.

3. How Much Does Health Care Cost Where You Live?

Costs can vary from place to place. In 2012, the California Public Interest Research Group Education Fund found that medical procedure costs were as much as 2.7 times higher in some parts of California. For example, a standard cesarean section cost:

  • $48,000 in San Mateo
  • $27,849 in Sacramento
  • Less than $13,000 in Fresno

If you live in a higher-income locale, you’ll likely pay more for the same care — and you might need a supplemental insurance plan if you’re strapped for cash. For a ballpark of what some procedures might cost near you, search the Healthcare Bluebook.

No one likes dropping cash on health care, but finding the best supplemental insurance for you could mean spending just a little now to save a lot later.

Bana Jobe

Bana Jobe is an award-winning medical writer with over 10 years of experience

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