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Life & Health
Protect your loved ones and assets with a policy that is also an effective investment vehicle against tax liability.
Life insurance policies can be categorized in several ways. One way of looking at them is by considering their periods of coverage—how long they keep you covered for. Term life policies are active for a set amount of time that you choose, whether that’s 10 years or 30 years. Permanent life insurance policies, on the other hand, remain active until you die—provided you keep up with your premium payments, that is.
One other big distinction involves the type of benefits each policy provides. Term life policies tend to be fairly simple. They offer a predetermined payout—typically tax-free—if you die while the policy is active, but they don’t build up any additional cash value over time. Certain types of permanent life insurance, on the other hand, accrue additional cash value with various tax advantages. Some policies—like variable life—do this via investments in the stock market. These types of life insurance should be considered as part of an overall financial and estate plan.
If you're enrolling in your employer's health insurance plan for the first time or updating your existing coverage, it pays to be prepared. You might wonder if it makes more sense to go with a high-deductible or low-deductible plan.
Like most benefits-related questions, there is no one-size-fits-all answer to that question—it just depends on your individual needs.
The simplest way to decide whether a high or low-deductible plan makes more sense is to consider your health situation.
If you're young and healthy, you may be less likely to need anything more than preventive care, in which case a high-deductible plan could be the better fit. On the other hand, a lower deductible may be more appealing if you're older, have a chronic health condition, participate in high-risk sports or activities, are pregnant or plan to have a child at some point, or you require pricey prescriptions for a health issue.
It also helps to assess your savings and budget. Consider how easily you'd be able to meet a higher deductible if necessary. And if you have access to an HSA (health savings account) with a high-deductible plan as an employee benefit, ask yourself how much you'd be able to contribute each year. (Note: Similar to other tax-advantaged accounts, HSAs have annual contribution limits: for 2021, $3,600 for individuals with self-only coverage and $7,200 for those with family coverage.)
With a low-deductible plan, think about how much you can afford to pay for the monthly premium. Weigh that against the value of being able to have health care services covered when you need them without having to hand over a significant amount for the deductible.