Keep Health Insurance In Place
Derek has $5,000 in savings. The deductible on his health insurance is $5,000, and the premiums are $390 a month. Should he drop the health insurance to get more focused on paying off debt?
QUESTION: Derek in Utah is on Baby Step 2, and he has $5,000 in savings. The deductible on his health insurance is $5,000, and the premiums are $390 a month. Should he drop the health insurance in order to get more focused on paying off debt?
ANSWER: No, you keep your health insurance.
Health insurance doesn’t bother me for a $10,000 problem. But too often, when something weird happens, it’s a $200,000 problem at the hospital, and we just don’t know when those days are going to come. There’s no way to know. People get that when they’re 32. They get it when they’re 42. They get it when they’re 52. You do not know when you’re going to have a big health insurance mess or a big medical mess, and health insurance is for that.
It’s basically like your homeowner’s insurance. You’re not expecting your house to burn, but if it does, it would bankrupt you, you know, if you don’t have homeowner’s insurance. That’s what this is for. It’s not really for the knick-knack, day-to-day stuff. It’s for the big events that scare me. Catastrophic care is really what I’m concerned with in health insurance. Anything under $10,000, $15,000, I don’t want you to be another $10,000 in debt, but you could work your way out of that. A hundred and twenty? Two hundred and forty? That might bankrupt you, you know?
So I don’t want you to be without health insurance. Never have advised dropping health insurance since I started, by the way. I’ve always advised to keep health insurance in place even if it’s a high deductible on a low co-pay and all that kind of stuff.