You need health insurance to protect your family in case of illness, but you also need an affordable policy. One of the most effective solutions is securing a so-called 80/20 policy with a high deductible and stop-loss provision.
In health insurance policies, 80/20 is a common coinsurance provision that requires the insurance company to pay 80 percent of the medical costs and the insured to pay 20 percent.
The 80/20 provision typically begins after the insured reaches the deductible. Up until this point, the insured is responsible for all medical expenses. Insureds typically have a range of choices for the deductible; for example, they may be able to choose a policy with a $250, $500, or $1,000 deductible.
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An 80/20 insurance policy may also include a stop-loss provision. After your medical expenses reach the stop-loss amount, the insurance company begins to pay 100 percent of your claim.
Lowering Your Insurance Premium
To lower the cost of your 80/20 health insurance policy, set your deductible and your stop-loss amount as high as you can afford.
80/20 Mortgage Insurance
Mortgage insurance can also have an 80/20 provision. Most lenders require mortgagees to buy private mortgage insurance until they have paid 20 percent or more of their mortgage.
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