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A cheaper health insurance policy will usually cover less than a more expensive one. However, when you are comparing policies that are similar with the exception of the deductible, you will usually find that the less expensive, high deductible health insurance policy will cost you less in the long run when compared to the high cost low deductible policy.

Most of us are aware that if we buy a policy with a higher deductible, we will pay less and get less coverage. This is true, but the important thing you should be aware of is that the proportionate differences are not likely to be equal.  The more expensive policy may be better, but the difference in quality may not be enough to justify all of the additional cost.

For example a policy that costs twice as much may only cover 50% more. This means that you will very often get more “bang for your buck” when purchasing a policy with a medium deductible or a high deductible.

If you are comparing two otherwise identical policies where one policy costs $100 a month and has a $1200 deductible and another policy costs $200 a month but has a zero deductible, which is the better deal?

In the worst case scenario your overall cost for health care will be the same with each policy.

If you purchase the more expensive health insurance policy, you will pay $1200 ($100 times 12) for the premiums and $1200 to pay your deductible. This will total $2400.

If you purchase the more expensive zero deductible option you will pay the same in a catastrophic situation. ($200 times 12 equals $2400).

Although they are equal in a catastrophic situation, you will save money with the cheaper plan during any year that you don’t meet your deductible. The cheaper health insurance policy is the cheaper health insurance policy.

Although I’m advocating that you look at cheaper, high deductible policies, I strongly suggest that you make sure that you purchase from a good company and that you purchase a policy that has good coverage for the big things. I generally recommend policies that have at least a $5,000,000 lifetime cap and no annual cap on the major benefits.

You can sometimes, get a good deal from an “off brand” health insurance company, but make sure that the company is approved by your insurance department and is financially stable. We recommend policies from Aetna, Anthem BCBS and Connecticare more often than we recommend policies from other companies, but the lesser known companies at times offer better options for our clients. This is providing that they meet the above criteria.

The cheaper health insurance plan is the better deal in many situations assuming that you are comparing similar policies. Don’t be afraid to pay less for health insurance! so long as you understand what your policy covers and doesn’t cover.

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Alston

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