Health! We often hear this wish and never really take it seriously. Okay, we think about what it means to be healthy, that it is good to be healthy. You can work to earn money to ensure a good future for your child, a good standard of living for your family, to have vacations, a house of your own, but gratitude for health appears when a health problem occurs.
Everyone who has gone through an uncertain period of health will say that the proverb about health: “you don’t value your health until you no longer have it” is true.
As a financial planner and independent consultant, I work in the insurance field and I have noticed that many people consider health important, but would not put money aside for it.
Health insurance
Health insurance does nothing more than protect you financially when you have health problems. Insurance is designed to relieve you of the financial side of these problems.
In the age of technology, medical devices and medical discoveries are fantastic; they benefit patients by being able to solve almost any health problem, but they come at a cost. You can choose to save up the money needed to cover the costs of medical treatments and interventions, or you can choose to pay a monthly insurance policy at a low cost to cover the costs of all health interventions and treatments.
Health insurance is a financial product that, if you do it on the recommendation of a professional and choose the best solution on the market for the risks you want to cover, then you will not end up in a position where you do not receive your money following the insurance contract where you have contributed. Large, serious companies will tell you from the beginning whether or not they accept you in the insurance and what exclusions there are, what benefits you have and how you will benefit from everything.
Advantages of health insurance
- The amount you pay is less than the cost of all the interventions it includes.
- You have access to an extensive network of private medical clinics.
- You have a second medical opinion included in the package.
- You choose the package that is right for you. There are three packages: basic, medium and extended. The basic package includes one intervention, check-up per year, the middle one has a higher insured amount than the basic one, which includes two interventions from each category: treatment, check-up, intervention, and the most complex package has the highest insured amount and includes an unlimited number of interventions, medical check-ups.
- Insurance can be taken out individually or per family, with some discounts.
- Their payment frequency is chosen from the beginning: monthly, quarterly, semi-annually or annually, also with a reduction in costs for annual payment.
- Medical check-ups are scheduled through the call-center network, choosing the closest clinic within the medical network or you can go to any clinic you want within the network.
- Appointments, within health insurance, have priority, even over those who pay for the medical check-up.
- Present the insurance contract insurance, and the insurance company and the medical network contact you and reimburse you for the services you received.
Casco insurance that targets health
Within these insurances: serious illness insurance or various accidents, possible risks that cause great damage to health and, implicitly, personal finances are taken over. Accident insurance falls into the CASCO category because that money, if you haven’t suffered anything, you won’t receive it. It is not a form of saving. They help you to have that money protect you in the event of unfortunate events regarding your health. The form of saving per se is other savings products, from the insurance category.
I gave an example in my group; on the Facebook group: Psychology of Money, regarding the product that I own, which protects me financially against serious illnesses such as cancer (all types) with the amount of up to 2,000,000 euros, including medical expenses, transportation and accommodation of a companion; treatment and interventions taking place outside our country. Personally, I have cases in my family and I considered that no matter how much I save and invest, I would not want to allocate for this risk, so, better, allocate separately for this risk. Yes, I would lose the money if I did not get sick, but it is better to lose approximately 10,000 euros during this entire period (100 lei / month x 40 years) than to experience such an event.
Savings / investment insurance
Savings insurance is designed to help you save money and receive a reasonable interest rate, specific to savings: 2-4% / year. They offer you the money at the end of the contract. In return, if it happens, during the death, the beneficiaries receive at the time of the event the amount that would have been collected at the end of the contractual period. Savings insurance is like a “mattress” where money remains in circulation, does not depreciate and ensures that, in the event of the most unfortunate event in life, there will be more money under the “mattress” than the deposited ones.
These insurances are investment funds that have a protection component attached: death. If this unfortunate event occurs, there is an amount that they receive, in addition to the value of the account.
Investment insurances are perhaps the most blamed forms of investment. (Well, the entire category of insurances is blamed!) They have conditions that must be respected and that are, for the most part, not flexible to be modified. Investments are made both on the domestic market and on the foreign market, in the most well-known and powerful indices, but not only. Money receives a higher profit than being kept up with inflation. The average return is 7%/year. The decision to invest only requires determining the amount and the market in which the allocation is made. The rest is taken care of by the fund administrators, who make the investments for you.
All these types of insurance are exempt from paying profit/income tax, which allows you to have more money.
Did you know that private pensions are part of the insurance category? Some characteristics are related to the regulations regarding the pension law.
Advantages and disadvantages
The most important advantages are: exemption from paying profit tax and participation in the guarantee fund. Secondary advantages: financial protection in unfortunate cases in life, ensuring that you will establish your proposed objective.
They require a great deal of self-knowledge. Why? Because, if you have decided NOW to save for LATER: your child’s education to get married (yes, there is marriage insurance – which is nothing more than savings insurance) and in 5 years you want to change your car, you will receive a much smaller amount than the one you deposited until then.
The disadvantage is that if you have not respected your objective, then it will no longer be achieved.
This disadvantage can be represented by an advantage: the fact that you have the certainty of achieving the established objective. Therefore, the amounts deposited in these products must take into account many more aspects and be money that you can “give up” month by month for your comfort.
The most flexible insurances are investment ones.
Is insurance a scam?
If you think a scam is that you get less money if you don’t honor your contract, then yes, you can say that.
In the past, it’s true, there have been companies that went bankrupt and didn’t have a guarantee fund. Again, it wasn’t a scam. Simply put, when we make a financial decision, it is necessary to know all aspects of that decision, including the clauses regarding the company’s protections.
To see how insurance helps you, I invite you to read case studies like this: https://financialparenting.eu/de-unde-bani-pentru-analize-si-spital-privat/
Knowledge, financial education saves us from those unprofitable decisions. A specialist also helps us. And it is necessary to make a comparison in the market regarding costs, benefits to make the best decision, both financial and psychological. I invite you to discuss more: https://www.psihologiabanilor.ro/consultanta-financiara/
Success in becoming aware of money and the right vehicles for you!
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