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Health Insurance

“Major medical” insurance plans were widely used before the health insurance problem reached crisis proportions. With a major medical plan, the policy holder goes to his or her own doctor, pays the bill, then submits a claim for reimbursement to the insurance company. Most plans have a “deductible,” an amount you pay yourself. If your plan has a $1000 deductible, for example, and you had $5,000 in medical expenses, you’d pay the first $1,000 and be reimbursed for the remaining $4000.

The larger the deductible, the lower the cost of the insurance. If you wanted insurance to protect yourself only against “catastrophic” medical expenses–$100,000, for example–you might decide on inexpensive insurance with, say, a $10,000 deductible. You’d be willing to absorb some expenses once in a while in order to reduce premium payments year after year.

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