Why the Lowest Premium Might Cost You More in the Long Run

When shopping for insurance, whether it’s health, auto, or homeowners, it’s tempting to zero in on the lowest monthly premium. After all, who doesn’t want to save money? But while a lower premium might feel like a win at first, it can end up costing you far more when it comes time to actually use your coverage.

In fact, the Kaiser Family Foundation reports that average annual out-of-pocket costs for individuals with high-deductible health plans are 39% higher than those with traditional plans. And it’s not just health insurance; auto and homeowners policies with rock-bottom premiums often come with higher deductibles, fewer covered services, and more exclusions.

More Out-of-Pocket Costs When You Least Expect It

Lower premiums often come at the expense of higher deductibles, co-pays, and coinsurance. This means you pay more when something actually happens. If you need surgery, get into a fender bender, or experience a house fire, those extra costs can quickly eclipse the savings you gained from your "cheap" policy.

For example, in a high-deductible health plan with a $7,500 deductible, you could be on the hook for thousands of dollars before insurance kicks in. And according to a 2023 report by Bankrate, 56% of Americans can’t cover a $1,000 emergency expense without borrowing or using credit. That “cheap” policy suddenly doesn’t feel so affordable anymore.

What Low-Premium Plans Might Leave Out

It’s not just about deductibles. Low-cost insurance plans often come with narrower networks or less comprehensive coverage:

• Health insurance may exclude specialists or out-of-network hospitals.
• Auto insurance might only cover liability, leaving your own vehicle at risk.
• Homeowners policies may not include important coverages like water backup or replacement cost for personal property.

These stripped-down plans leave you vulnerable to large, unexpected expenses at the worst possible times.

How to Think Long-Term

When comparing plans, look at total cost of care or protection, not just what you pay monthly. Consider:

• Deductibles and co-pays
• Coverage limits and exclusions
• Out-of-pocket maximums
• Customer service and claims experience

Sometimes paying a slightly higher premium is the smart financial move that gives you peace of mind and better protection.

Bottom line: The cheapest premium might be the most expensive decision in the long run. Our office can help you find coverage that balances affordability and protection, as a perfect mix for peace of mind.