Planning for Health Care Expenses
This is the amount you must pay before insurance begins covering costs.
What is a deductible?
This type of life insurance provides coverage for a specified period.
What is term life insurance?
This refers to the potential for losing money in an investment.
What is risk?
This government program provides retirement income based on prior earnings.
What is Social Security?
This account allows individuals with high-deductible health plans to save pre-tax money for medical expenses.
What is a Health Savings Account (HSA)?
This policy type includes both insurance protection and a savings component.
What is whole life insurance?
This principle involves spreading investments across assets to reduce risk.
What is diversification?
This retirement account allows tax-deferred contributions, often matched by employers.
What is a 401(k)?
If a plan has a high deductible but lower monthly premiums, it is typically classified as this type of plan.
What is a high-deductible health plan (HDHP)?
A primary purpose of life insurance is to replace this for dependents.
What is income?
Stocks are generally considered this type of investment relative to bonds.
What is higher risk (and higher return)?
Withdrawing from retirement accounts before age 59½ typically results in this.
What is a penalty (and taxes)?
Why might a young, healthy individual choose an HDHP over a traditional plan?
What is: lower premiums and ability to save via HSA outweigh higher out-of-pocket risk?
Why is term insurance often recommended over whole life for many individuals?
What is: it provides higher coverage at lower cost, making it more efficient for income protection?
Why does a longer time horizon allow for more aggressive investing?
What is: more time to recover from market volatility?
Why is starting retirement savings early so powerful?
What is: compound interest has more time to grow contributions?
Evaluate the financial risk of being underinsured for major medical events.
What is: high out-of-pocket costs can lead to debt or bankruptcy despite having insurance?
Determine how much life insurance a family needs using income replacement logic.
What is: calculate future income needs, debts, education costs, minus existing assets?
Evaluate the trade-offs between active and passive investing strategies.
What is: active seeks to outperform but costs more; passive is lower cost and often matches market returns?
Evaluate the importance of estate planning documents such as wills and trusts.
What is: they ensure assets are distributed according to wishes and reduce legal complications?