Choosing between Life and Health Insurance

Even if your health takes a turn for the worse, knowing that you and your family have a financial safety net is comforting. In times of financial hardship, it might be difficult to pay for both a life insurance policy and healthcare coverage each month. With rising costs, it’s easy to compromise on one or the other in order to keep things affordable.

However, each sort of insurance has a distinct function and delivers a unique set of benefits.


  • Couples in their early twenties are often recommended to get both health and life insurance policies.
  • A percentage of medical bills and doctor visits are covered by health insurance, while a death benefit is paid out in the event of an early death.
  • The Affordable Care Act has made it simpler for healthy young people to get or remain on a parent’s health insurance plan, despite the fact that they typically do not have health insurance.
  • If you have children, you’ll likely require life insurance in addition to health insurance.
  • Paying for health and life insurance at the same time becomes much more manageable when you simply purchase the coverage you really need.

Health Insurance vs. Life Insurance

In the event of your untimely demise, your beneficiaries will get a lump amount from your life insurance policy. There should be enough of the death benefit to cover the loss of future income as well as any existing bills, such as burial charges or hospital expenses—or to support college savings or retirement years. As a result, the family’s financial stability is maintained, despite the loss of your income.

While medical expenditures like doctor’s visits, hospital stays, drugs, tests and treatments are paid for by health insurance. This ensures that everyone has access to health care and can remain in good health.

Many individuals, particularly those with dependents, need both forms of insurance. Consider cutting down on your coverage if that’s the case. You’ll be able to pay for both forms of insurance.

It’s important to remember that as you go through life, your insurance requirements may shift substantially. If you are a recent college graduate or are retired, you may not need the same things a parent with a teen kid does.

Invincibles, the “Young”

Around 30% of people under the age of 26 were without health insurance prior to the 2014 implementation of the Affordable Care Act’s (ACA’s, passed into law in 2010)1initial phase.

2 These “young invincibles,” as some specialists name them, have a considerably lower rate of health issues than the rest of us. For some, paying a monthly fee for health insurance was a waste of money. That began to change, however, when the ACA made it a requirement for the majority of Americans to obtain health insurance. 3

Starting in 2019, the requirement (or, more precisely, the noncompliance penalty) will be abolished by the Tax Cuts and Jobs Act (TCJA).

Even yet, if you take into account the benefits of health insurance, you may decide to get it.

One bright thing for fresh graduates is that the ACA enables you to continue on your parent’s plan until the age of 26.2%. For now, at least, you won’t have to worry about getting your own insurance.

There are a few of jurisdictions that allow adult children to continue on their parents’ health insurance plan until they are 30 or 31.5 years old. They must be single and without children to be eligible.

If you’re under 30 and can’t depend on your parents’ coverage, you may want to check into a low-cost catastrophic policy. Doctor visits and other day-to-day health care requirements won’t be covered by your insurance company, but once a certain amount of money is spent, you’ll be protected in the event that anything catastrophic happens. People with a near-perfect medical history may be able to get by with this level of insurance.

The healthcare market in your state may allow you to purchase one of four different levels of insurance coverage: Bronze, Silver, Gold, or Platinum. You may be able to seek some support from the government. However, in order to be eligible for a tax credit, your household income must be between 100% and 400% of the federal poverty line. To qualify for a subsidy in 2021, you must earn less than $51,040 for individuals, $68,960 for couples, and $104,800 for families. This value is four times the federal poverty level for 2020 in each situation.

As a result of the American Rescue Plan Act, those with earnings over 400 percent of the federal poverty threshold are now eligible for ACA tax credits to assist reduce the cost of monthly insurance premiums until the end of 2022. For low-income customers, subsidies will be increased from 100 percent to 400 percent of the poverty level; the maximum amount someone must pay for marketplace health insurance will be 8.5 percent of their income vs. 9.83%.
Even if you don’t qualify for coverage through the ACA’s Medicaid expansion, you may be able to acquire it via your state’s Medicaid program. As a recent college grad, you may be eligible if you work at a neighborhood coffee shop or grocery store to make ends meet.

A Life Insurance Program for Young People

In terms of health insurance, you may not be able to opt out, but this isn’t the case with life insurance. You may not need it if you haven’t had any children yet.

There are a few exceptions to this rule. Take out a policy big enough to meet the demands of your parents or grandparents if you are financially supporting them. Another option is to get a modest insurance that will pay for your funeral costs if the unthinkable happens. For those in their twenties or thirties, this form of insurance is typically not prohibitively costly if they stay with a basic term policy.

Taking Care of a Household

Health insurance takes on a new significance when children are involved (or even simply a spouse). Employer-sponsored health insurance is often less costly than purchasing a plan on the open market, however this is not always the case. When you have “individual” health insurance, you are responsible for paying the whole premium, excluding any tax credits or subsidies you may be eligible for.

Some policies offered by your organization are more affordable than others. Take a peek at the costs of the various coverage options offered by your business during the open enrollment period. Determine how much you’d have to spend out of pocket if you were to use each option for things like emergency care or lab tests. You may not be able to justify the additional cost of a top-tier plan.

Families who don’t have health insurance through their jobs but purchase it on the individual market may use the same logic. If you don’t intend to spend a lot of money on medical care, a “Silver” plan may be sufficient for your needs.

Life insurance is a need in today’s society.

If you have children, you’ll likely require life insurance in addition to health insurance. But it doesn’t have to cost you a fortune to provide financial security for your loved ones. To begin, look into purchasing a term insurance, which is only valid for a certain period of time. Permanent insurance products like whole life and universal life tend to be much more expensive.

Purchasing exactly the amount of life insurance you really need may also help you save money. It is possible to determine this in many ways. One method is to multiply your yearly income by a certain number—for example, 10—and then use that number to calculate the face value of the insurance.

As an alternative, it may be more beneficial to calculate the costs your spouse would experience if you were no longer around. Consider the costs of daycare, groceries, a home or auto loan, and college tuition, to name a few. After that, take a deduction for whatever money you have in savings or investments. The discrepancy should be covered by your insurance.

If you have dependents, any insurance is preferable than none at all. Make the most of the situation by purchasing what you can afford.

Those who have recently left the nest

It’s a sad truth of life that as you grow older, your chances of developing health issues increase. When it comes to medical insurance, middle age isn’t the time to begin slashing your premiums.

Is it worth it to become older for the sake of your wallet? You may be able to reduce your life insurance needs after your children achieve maturity and financial independence. That doesn’t mean you’ll have to give up all of your insurance coverage. In the event that you still owe money on your mortgage or rely on a pension that doesn’t include a survivor benefit, you’ll need some kind of insurance.

It’s possible to take out a smaller policy that serves as a safety net throughout your post-childcare years if your current term insurance expires. With a conversion option in place, you might convert some of your term insurance into a permanent life insurance policy.

Convertibility saves you from having to go through the process of medical underwriting again, which gets more difficult as you grow older and have more health conditions to deal with. Be aware that this function is only available for a limited period of time, therefore it’s important to check your carrier’s terms and restrictions.

Is Life Insurance or Health Insurance Better?

The purpose of health insurance is to cover the costs of medical care, prescription medications, and routine checkups for you and those you insure. If you die within the term of your life insurance policy, your loved ones will get a lump sum payment.

Is Life Insurance Still Necessary After Retirement?

In the end, there’s no one solution. In the event of your death, you may not need life insurance if you are financially secure and your children are financially independent.

In the event that you have children or a spouse who relies on you financially, it is a good idea to retain life insurance. An irrevocable trust funded with the proceeds of life insurance may be an option if you have a large estate and must pay estate taxes.

Does Health Insurance Coverage Even if I’m a Young Adult

If you’re young and healthy, it’s still a good idea to carry some kind of health insurance—at the very least, in the case of an emergency. Injuries and serious diseases may occur at any time, and even the most minor of procedures can cost hundreds or even thousands of dollars. If you don’t have health insurance, you’ll have to pay for all of those costs yourself. Even while it’s becoming less common, some doctors’ offices and emergency rooms may refuse to treat you if you don’t have health insurance.

The End of the Story

Paying for health and life insurance at the same time becomes much more manageable when you simply purchase the coverage you really need. When it comes to chronic sickness, those of you under the age of 30 may not need the latter. When you’ve got a family to care for, there are two things you can’t avoid:

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