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Friday, April 18, 2014

Is Dental Insurance Worth it?

Posted by Tim Stobbs on December 6, 2012

I currently have dental insurance through my work and while it does seem to save a lot of money I was curious how much did it really save me.  So  I kept track of our dental costs through 2012 and here is the summary of the work done:

  • Four checkups and cleanings (two kids, two adults)
  • Three adult fillings
  • Four kid fillings
  • Coating on four teeth to prevent future cavities for kids

Total cost invoiced by the dentist: $1952.  Yikes that’s a lot of money!

The premiums on my dental plan cost me $37.99/pay period or $911.76 per year.  Ugh, that’s a lot of cash off my paycheques, but my co-pay on all that dental work was only $414.  So in total we paid $1325, so we saved about $627 or 32% of the cost.

What is really interesting is the checkups and cleanings were $748 of the cost invoiced by the dentist.  So if you ever have those years were all you have done is the cleanings, then I’m actually paying more in premiums than the savings I’m getting from the insurance.  To make it break even on a yearly basis you need to have at least one filling fixed per year in your family.  After that I’m actually getting some savings out of the insurance.  Of course if you dental plan covers major expenses as well there is that additional benefit which can save you even more.

In summary, yes dental insurance can be worth it if you get routine work done on a fairly consistent basis (at least in this example), but if you have really good teeth and almost never get any work done…well you are likely in a losing situation.

So are you planning to have dental insurance in your retirement?  Or are you going to just accept the costs the come up?

So How Do You Get An Annuity Quote?

Posted by Tim Stobbs on October 12, 2012

So as a follow up question to my previous post on The Cure for Pension Envy when I discussed annuities.  I had a question from someone:

So how do you get an annuity quote?

Well you can search around the internet for public information on rates, for example I came across this website for Canadian information that would give you some ballpark numbers.  Yet there is a problem with these sort of sites as they will even warn that the rates change constant due to a number of factors.

So what factors really matter?  Well the obvious one would be the age difference between your spouse and you if you are looking for a joint annuity  (when your spouse will continue to get payments if you die).  If you are just six months apart in age that is one thing, but if you are six years apart that is an entirely different ballgame especially if you are picking up an annuity in your 70s.

So in the end, it might just be faster to breakdown and contact some companies directly and get some quotes.  That way you can be sure to get the correct information for the options that you are looking for and for your particular situation.    In general the quote forms will be similar and ask the following information:  your name and contact information, what product you want a quote on (single, joint or term certainty), your age (and your spouses age if applicable), if you plan on using money from your retirement or investment accounts and then some details on what payments you are looking for (and how often) or the lump sum you are looking to invest.

A quick search with Google for ‘annuity calculator’ will generate a nice list of potential places to check out.  For example I ran a few different searches and came up with a few sites like: Saga annuity calculator (UK) or RBC annuity calculator (Canada).  You should with little difficulty be able to get a list of quotes to know approximately what you are looking at if you really want to buy an annuity.

Winning with Insurance

Posted by Robert on July 9, 2012

Not everything with the word “insurance” in its name is actually insurance. Sometimes, it might simply be a cost recovery plan. Here’s how you can tell the difference and why I’m opting into an insurance plan.

Insurance protects against unforeseen costs. Cost recovery reimburses planned costs. If we know that out of every 1000 workers, 5 are likely to be injured on the job, we can put in place accident insurance. It will cost 5/1000ths of a dollar for every dollar of benefit (plus admin). That is an example of insurance, and it makes economic sense. Where I worked, we had a cost recovery plan that paid for eye exams. An eye exam is something that people can get every year, not only as needed. The cost of offering the benefit (eye exams) is the cost of one exam per employee. There is no savings to individuals.

I have just begun a master degree at the University. There is a graduate student association with an insurance plan. In order to function as insurance, membership is mandatory for all full-time graduate students. It offers health and dental benefits to students and their families. Because I’m a distance student, I can choose whether or not to opt in.

The math is pretty easy. The coverage costs a little under $500 per year and it covers me, my wife and our three children. The benefit includes up to $900 of work (in one visit) each per year. For $500, I can access from $0 to $4500 of dental work. Personally, I need a crown ($1000) and my middle child needed a $350 visit. The other family members need checkups, and I don’t know how much that costs. Already, we’ll get our money’s worth, and with some luck, we’ll get reimbursed more than the cost of the coverage. That feels like a rebate on my tuition.

Do you health or dental coverage? Do you feel it’s economically worthwhile