How to use open enrollment to evaluate your insurance coverages

Open Enrollment for health insurance coverage in 2021 begins November 1, 2020. If your health insurance is through your employer, you'll receive details about your enrollment from them.

Many employers use this time to have their employees review all of their benefits. Even if your health insurance is not through an employer or your employer does not offer a robust benefits package, you can implement this practice yourself to ensure that all your insurance needs are met.

Here are three steps to take to ensure that you have the insurance coverage you need:

  1. Assess your needs
  2. Consider your options
  3. Purchase insurance

1. Assess your needs

Consider your situation:

  • How does your family get income? — Does your family primarily earn income from a job? Do you have rental properties? Do you run a business on the side to earn more?
  • How much cash savings do you have? — Do you have enough cash on-hand to cover expenses for a month or more?
  • What are your family's current health, dental, vision, etc. needs? — Does anyone in your family need eyeglasses or regular vision checks? How frequently does your family visit the dentist? Does your family have medical conditions or a history of medical conditions that can lead to costly medical treatment?
  • How are you preparing for retirement now? — Are you setting aside money in a retirement account to cover future expenses when you are unable to work or want to retire?

Once you have a good sense of what your financial situation looks like and what your needs are, think through potential scenarios you are likely to encounter in the next year and even scenarios that you don't think are likely but still possible.

For example, consider these questions:

  • What would happen if you or your partner lost a job or were unable to work?
  • What would happen if you or one of your family members passed away?
  • What would happen if you or one of your family members got sick?

As you think through these situations, create a financial plan to handle each one. Know what expenses you could quickly cut to save money. Identify ways you could replace lost income like filing an insurance claim, finding another job, or applying for Social Security benefits.

If you don't have an insurance policy that would help in these situations, evaluate whether or not an insurance policy would be worth it.

A comprehensive health insurance plan helps control your out-of-pocket costs by giving you access to pre-negotiated discounts and cost-sharing once you've hit the annual deductible. Monthly premiums are expensive. However, the financial protection and access to health care will help you stay ahead of and monitor illness and medical conditions.

Fortunately, the government offers subsidies on premiums to qualifying individuals and families who buy plans through the Health Insurance Marketplace. You may also qualify for Medicaid or Medicare.

Like health insurance, dental and vision insurance offer coverage for services. Dental insurance typically covers cleanings and check-ups. Most dental plans also cover restorative care like fillings. Vision insurance covers eye exams and helps pay for glasses.

A life insurance policy offers long-term financial protection if the insured person passes away. The death benefit money can be used for funeral costs, paying debt, and covering regular expenses like child care. A life insurance policy can protect your family's financial future and stability.

Remember to carefully consider the monthly premium costs to ensure that they fit into your budget. If you don't pay them, your coverage will end.

Disability insurance replaces some of your income if you become unable to work due to a disability. Definitions of disability vary by policy. Some only offer coverage if you are unable to work in any job. Others offer coverage if you're unable to work in your field.

Having a way to replace part of your regular income protects you and your family's finances and allows you to focus on recovery and healing.

2. Consider your options

If you decide that an insurance policy would be helpful to protect your financial stability, you'll want to start looking at coverage options.

Health insurance

Compare plans by their network structures, monthly premiums, and out-of-pocket costs. Out-of-pocket costs can be difficult to assess, but it's important to make your best guess at a comparison based on how you use your plan.

Dental insurance

Evaluate plans based on covered services, dental network, monthly premiums, and out-of-pocket costs. As you evaluate the coverage offered by your plan, think through the kinds of dental services you're likely to need.

If you most likely won't need major restorative services like root canals or bridges, you can opt for a plan that doesn't cover these services. Keep in mind, however, that most dental plans do not cover pre-existing conditions unless it was a covered service under your previous plan.

Vision insurance

Think about how much glasses or contacts cost and how frequently you replace them. Consider whether or not your vision has changed and how much it has changed. Compare plans based on cost and coverage.

Life insurance

Work with a financial adviser, life insurance agent, or use an online calculator to determine how much life insurance coverage you need. You should also consider whether you need a term or permanent life insurance policy.

In many cases, term life insurance is the best fit because it is the most affordable and many people only need coverage temporarily while they pay down a mortgage or while their kids grow up.

Compare policy features and estimated costs before applying. Once you apply and are approved with a finalized rate, you can buy the policy.

Disability insurance

You can buy short-term or long-term disability insurance. Short-term disability policies start paying monthly benefits sooner than long-term disability ones. Most insurers allow you to customize the waiting period, monthly benefit amount, and benefit period.

The waiting period is the time between when you file a claim and the insurer starts making monthly benefit payments. The benefit period is how long the insurer makes those payments while you are unable to work due to disability.

Depending on your chosen benefit amount, benefit period, and waiting period, your monthly premium costs will vary. Your profession, age, and gender also affect your rate. Keep in mind the balance of benefits and cost as you consider policies.

3. Purchase insurance

Once you've found a plan that meets your needs, make a purchase. With disability and life insurance, you may need to apply and wait for underwriting to be completed before you can make a final purchase.

Fortunately, many insurtech companies have made shopping, applying, and buying insurance a simple online process. For example, Breeze offers a simple online application process. After providing some personal information, you'll see several recommendations. You can then select the option that works best for you.

Reviewing your insurance coverage needs will help ensure that you and your family have the financial protection you need for the coming year.


Alice Stevens is the senior editor over BestCompany.com's insurance content. She’s passionate about conducting good research and understanding the details you need to know about insurance. When she's not writing and researching, she enjoys good food and travel.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

Insurance
Published September 15, 2020