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Written by Carrie Johnson (former SDSU Extension Family Resource Management Specialist).

Insurance Overview  |  Health Insurance

Protect Yourself

Insurance is a contract with an insurance company that promises to pay for certain financial losses you suffer if you pay a premium. Many include a deductible which you must pay before the company begins to pay for the loss. You want to choose a deductible that is large enough to reduce premiums but small enough to prevent financial hardship when a loss occurs.

Every day we are exposed to many risks which can cause a financial loss. Accidents, property damage, illness, and death are risks we often consider. However, other risks, such as the possibility of being sued or becoming disabled and unable to work, are also important. We each have to decide how we will protect ourselves should a risk become a reality. If you do not have a plan, you might have to go into debt or use funds set aside for other financial goals in the event of financial disaster.

Appropriate risk management strategies protect against catastrophic financial losses, regardless of the cause. Good comprehensive insurance coverage against severe setbacks is essential. Areas for coverage include life, health, homeowner’s or renter’s, auto, disability, and liability. Smart consumers can obtain this coverage at a cost that allows them the financial flexibility to accomplish other goals without being insurance poor. Note that this type of risk management should not be confused with investment risk, which is a different financial concept.

To determine when you need to purchase insurance, consider the best way to handle each of your risks. Because your risks change over a lifetime, evaluate your situation every few years and make appropriate changes. Can your savings cover a financial loss so that you don’t need to buy insurance? Increasing the deductibles (the portion of a loss that you pay) on your policy usually saves you money as well. However, when self-insuring or carrying high deductibles on policies, you must set aside the necessary funds in your emergency cash reserve to pay for those expenses in case of a loss.

Risk management strategies can be combined with savings and investments to achieve financial goals (e.g., buying cash value life insurance). However, be careful to ensure that your strategies provide the best return on the money involved. Determine if insurance protection can be purchased less expensively so that you can invest the savings for a greater overall return.

Five Main Types of Insurance

  1. Automobile insurance – Most states require all car owners to have auto insurance. It includes different coverage for different losses. These are losses that may occur in the operation of a car.
  2. Property insurance – This is an important part of risk management. Property could be real property, such as your house and other structures such as fences or tool sheds. Or it could be personal such as furniture, clothing, and appliances. The type of policy you have determines which perils you will be protected against and to what dollar amount that protection will be.
  3. Life insurance The primary reason to buy life insurance for yourself is to protect others. There are many types of life insurance choices such as term, whole life, universal, variable, and variable/universal. All but term have an investment component. A policy specifies an amount of money to be paid to beneficiaries when the insured dies.
  4. Health insurance – Health insurance can be discussed as two groups. Medical and disability. Basic medical insurance takes care of the initial hospital surgery and supply costs. Some employers provide medical insurance. Disability income protects your earning power and income.
  5. Liability insurance – This protects you from personal and financial loss that may result from lawsuits against you. Liability implies that you have a legal responsibility to someone and must pay for personal injury or property damage caused by neglect on your part.

Insurance Resources

Useful Websites

  • Meeting your Insurance Needs: A comprehensive insurance review will help you determine whether you have adequate or perhaps too much insurance coverage. A guiding principle should be, how would a change in coverage affect the health and well being of my family?
  • SD Division of Insurance: Their mission is to protect the public and make insurance available and affordable by efficiently providing quality assistance, providing fair regulation for industry, and promoting a healthy, competitive insurance market.

More On Health Insurance & The Affordable Care Act

Health insurance is important to maintain your health, but choosing the best plan for you and/or your family can be complicated. You can’t always predict health care needs but by making a sound decision about what health insurance coverage to have is a good start.

Answering the following questions is a good place to start when trying to decide which plan is best for you:

  • Why? Why do I need health insurance? Why is it important?
  • What? What do I need and want? What are my choices?
  • How? How much will it cost? How much can I afford?

Health Insurance Resources

Below are some general health insurance resources available to consumers.

 

Get Covered South Dakota

Get Covered South Dakota for a new state of health. Find local help to learn about affordable healthcare options. Enrollment specialists provide free assistance and connect you with resources that help you get covered.

 

My Smart Choice Health Insurance Consumer Workbook

It’s open enrollment for health insurance. Are you dreading the decision-making process? Are you confused by all of the choices? Do you want to know the questions and answers you need to make a smart choice?

The University of Maryland has created a workbook designed to help you through the process. My Smart Choice Health Insurance Consumer Workbook is consumer-tested and research-based to assist those who have insurance and those newly eligible to enroll. Click here to visit UMD Extension and download the workbook.

Websites

  • USA.gov: Health Insurance Information: Learn about your health insurance options. Get information about the Health Insurance Marketplace, Medicare, Medicaid, and other programs to help you pay for your medical expenses. Source: United States Government
  • elaws® – Health Benefits Advisor: The Health Benefits Advisor is designed to help workers and their families better understand their right concerning access to health coverage when they experience changes in their life and work situations – such as marriage, childbirth, job loss or retirement. Source: United States Department of Labor
  • Insure U: Provides tips and facts to assist in health insurance planning and future health decisions. Source: National Association of Insurance Commissioners.

Affordable Care Act Resources

Below are some resources available specifically on the Affordable Care Act.

Featured Articles

Documents

  • Health Reform: Seven Things You Need to Know: This publication describes key features of the ACA and how it impacts health care decisions. Source: Consumer Reports
  • Summary of Coverage Provisions in the Affordable Care Act: This short summary describes the health coverage provisions contained in the final version of the ACA including the individual mandate requirements, expansion of public programs, health insurance exchanges, changes to private insurance and employer requirements. Source: Kaiser Family Foundation

Websites

  • eXtension: Receive up-to-date unbiased information on the Affordable Care Act written by personal finance experts from around the country. Source: eXtension
  • Healthcare.gov:The federal government’s main website for Affordable Care Act information and resources. Source: U.S. Department of Health and Human Services
  • About the Affordable Care Act Law: This site outlines the key features of the Affordable Care Act. Source: U.S. Department of Health and Human Services
  • Subsidy Calculator: Premium Assistance for Coverage in Exchanges: This tool illustrates health insurance premiums and subsidies for people purchasing insurance on their own in new health insurance exchanges (Marketplaces). Source: Kaiser Family Foundation

Available Assistance

For a list of someone who can help with personalized one-on-one situations click here. You can enter your zip code for the nearest Navigator or Certified Application Counselor. Application Assisters listed may still be completing federal and state certification requirements.

    

Disclaimer: The Affordable Care Act (ACA) contains many complex rules. The materials provided here are for informational purposes. They are intended to help you gain a better understanding about the key provisions of the ACA and how they may affect you. The materials are not intended to be a substitute for personalized, professional advice.

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