When it comes to insurance, you want to be able to get the best bang for your buck. However, how much of an impact does your financial wealth have on the insurance you buy?
Your wealth can play a big impact on the premiums you are eligible for and the types of policies you can afford. Generally, insurance policies work by the customer paying a monthly premium which will contribute to the yearly allowance that can be claimed on any one policy.
The higher the monthly fee you pay, the higher the limits of your insurance that can be paid out, making it beneficial to put in as much towards your insurance policy as you can afford. This also puts poorer people at a disadvantage. As they are unable to contribute as much monthly, they may end up with policies with higher deductibles or yearly contributions.
Healthcare Inequality In The US
Healthcare inequality is becoming more and more common across the United States, with wealthier families becoming one of the biggest purchasers of health care across income groups.
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Lower-income families tend to have more health requirements and also have been proven to have a shorter life expectancy than high-income groups. Poorer groups or groups who have trouble managing finances have become one of the lowest-spending groups in terms of health insurance policies. This means that the people who are most in need of affordable healthcare are the ones who do not have access to it.
Life Insurance
Life insurance is a policy where a customer pays into an insurance fund regularly over their lifetime, and once the insured dies the insurance company will pay an amount of money to named beneficiaries. This amount is dependent on how much the insured has paid throughout their lifetime. This means that if you are only able to pay in small amounts monthly, there will be significantly less money being left to your beneficiaries than if you were paying in large amounts monthly.
In addition to this, when you sign up for life insurance you must disclose your full current health condition and any high-risk activities you undertake to determine your risk factor. This can also alter the insurance policy in the favor of more wealthy groups, as it has been proven that wealthier groups tend to be healthier than poorer people.
There are two main types of life insurance policies. The first is a term life insurance and the second is a permanent life insurance policy.
A term life insurance policy lasts a specified number of years and then ends. You can choose the length of the term of your policy, usually 10, 20 or 30 years. Term life insurance is generally a more affordable option for longer-lasting financial strength for both you and your loved ones.
Permanent life insurance, however, is what it says on the label, permanent. This kind of policy will stay active for the entirety of the insured’s life unless they decide to stop paying or stop the policy. It tends to be more expensive than a term contract but can provide a much larger return to your beneficiaries after your death.
Monthly Premium
When it comes to any insurance plan, most are set out in a way that means you pay a regular monthly fee to the insurance company in exchange for coverage up to a set amount. If you are wealthy, paying a higher monthly premium is significantly less of a problem, so you have much easier access to higher insurance limits and a more valuable rate of return.
However, if you are in a poorer group and you don’t have the money to stretch every month, you may be stuck in a position where paying high monthly fees for a comprehensive coverage plan isn’t an option. In this case, customers are often opting for plans with low monthly payments that include less inclusive coverage, expensive extras and high deductibles, which can actually result in owing more money in the long run in the event you need to take out a claim.
Deductibles
When purchasing an insurance policy, it is important to remember that there are many things to consider. More and more recently, insurance companies are offering policies with extremely high deductibles. A deductible is the predetermined amount of money that you must pay upfront each year before your insurance plan begins to pay out.
Generally, the higher the monthly premium you are paying, the lower deductibles you will owe. This works in a difficult way for poorer groups of people who are taking out insurance, as paying a lower monthly premium makes day-to-day living significantly more affordable, while a higher deductible will result in higher amounts of money being owed overall.
In addition to your yearly deductible, your insurance policy may also require you to pick up part of the cost of the payment. For example, if you are making a claim on your health insurance you may still be required to contribute towards your hospital bills, or the policy may only cover you up to a certain amount. If your insurance only covers you up to $10,000 a year but you undergo some serious surgery and a lengthy hospital stay, you might still end up owing thousands. While this may be less of a problem for wealthy groups, these kinds of payments can throw a poorer family into financial ruin and extreme debt, even with the help of their insurance policy.
