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Investing Health Insurance Savings: A Rainy Day

October 26th, 2011 0 comments
Rainy day

As we continue through the possible ways you can invest your health insurance savings, we meet an interesting option: putting money away for a “rainy day”.  If you do this, you’re more likely to cope well with an unexpected expense in the future.

Image by Molly DG

The Rainy Day Situation

You might have great health insurance coverage.  Maybe you compare private health insurance rates regularly and always find a wonderful health insurance quote for the coverage you need.  You follow through and, after reading the fine print and thinking about the purchase, obtain the coverage.

However, health insurance won’t cover every dollar that you will spend regarding healthcare costs.  After all, there may be deductibles, co-payments, medications that might not be included in your cover, and so on – and there even might be a bigger expense like an operation that isn’t fully covered.

When you hold homeowners’ insurance and car insurance, if you have a leaky faucet or radiator, you may still pay some or all of the cost of the repair. Apply the same principle to your health insurance and you can understand why some people find it useful to save money up for that “rainy day”.

Putting Some Money Away

The amount you might want to set aside for additional health expenses is not written in stone.  Your decision will depend on your coverage, healthcare needs, comfort with risk (say you have a $1,000 emergency healthcare expense today – could you handle it?), and other factors.  There is also a certain unknown factor when predicting future health insurance and health care expenses; you might not need that much, but you’ll never know until the unexpected occurs.

Take a look at your emergency fund, if you have one, to see how it’s doing.  Make sure you’re satisfied with the amount you’re saving against possible future needs.

Investing Fluidly

The key term is “fluid.”  If you put money away for a rainy day, you might want to access it on demand without undermining the return on your investment; stocks and similar investments often impose penalties for early access or access without notice.

Alternatively, you could set up an online savings account.  Searching online will show you the range of accounts available, including some where there are no fees, minimums, or other terms that can control your money.  While the interest rate isn’t much, there are online accounts that can earn you a return on your money.

If you develop a health care reserve fund, you might consider other ways to increase its growth, or re-evaluate your situation entirely a little further down the line.  If you don’t need the money for that “rainy day” in your health, there are many other options you can explore.

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