Major Medical Insurance

This tool does NOT provide an indication of which policy is a better investment.  It is intended to help the client select the policy that best meets his/her needs. See the help topic Protection Component Assumptions for more details.

Enter the current insurance alternative on the left.  Then enter a "better alternative" on the right.  The expectation is that the better alternative should have a lower annual premium.  Click Calculate to compare the two scenarios both in today’s dollars and at opportunity (future value of premiums).

No script is provided for this screen.

Potential Out of Pocket Cost

The financial professional must calculate and enter this value. For example, if you assume a client will have medical expenses of $1,000,000 and the client has a policy with $1,000 deductible and 80% expense coverage, the potential out of pocket cost would be about:

The deductible... $1,000

Plus 20% of additional expenses... 20% of 999,000 =   $199,800

Equals an Out of Pocket Cost of... $200,800

This simple example assumes all medical expenses occur in the same year.

Total Premiums

The Total Premiums are calculated in a spreadsheet.  There is a separate spreadsheet for both the current and alternative scenario.  The second column of each spreadsheet contains the premiums.  The third column contains the cumulative premiums.

Difference in Premiums at Interest (Future Value of Difference in Premiums)

The Premiums at Interest are calculated in a spreadsheet.  There is a separate spreadsheet for both the current and alternative scenario.  The fourth column of each spreadsheet contains the premiums at interest at the beginning of each year (row).  The fifth column contains the interest earned each year on the cumulative premiums.  The sixth column of each spreadsheet contains the premiums at interest at the beginning of each year (row).  

Of course, the difference in premiums at interest is the difference of the two values at the bottom of the column labeled Premiums.