Evaluating Health Care Insurance Options

The assignment content discusses the importance of health care insurance, evaluating and choosing a good health care insurance option, financial planning, investment in stocks, and mutual funds. The insurer should research and compare different plans to choose the best one that meets their medical needs. Financial planning involves estimating future expenses and investments, considering tax laws, and managing liquidity. Investment in stocks and mutual funds requires consideration of risk factors, investment objectives, and fund performance.

Part A:
1. Health Care Insurance is a type of insurance coverage in which insured person is reimbursed for
medical expenses paid by them. It will be reimbursed in case of accident, injury, surgery or
illness. It is to be noted that insurer will not reimburse 100% of expenses paid by insurer. This
will depend on type of insurance policy opted.
The insurer should take following steps to evaluate and choose a good Health Care Insurance
options:
a. Research for plans available and feasibility of policy for the insurer: The insured should
evaluate the plans available in the market by different insurance company. The plans are
available in different range for each category of person. The insurer should evaluate the
background of the insurer company also. It is very important that the insurer should a highly
rated organization, which has zero case of default payment.
Now the insurer will encounter various plans while researching for the insurance policy. The
most common type of insurance coverage available in the market are PPOs, EPOs, HMOs or
POS plans. The type of insurance coverage the insurer choose will determine the out-of-
pocket expenses and category of doctor, which one can visit.
When comparing different policy, one should keep the medical needs of their family
at the top most priority. Compare the amount of benefit one has received in the past.
Although opting the best plan is impossible, still this helps one to take an informed decision.
b. Compare the Out of Pocket expenses: It is important to evaluate how costs are shared
between insurer and insured. Any insurance plan will provide the details of benefits and
how much will be paid out of pocket for services. Normally, lower the premium, higher
would be the out of pocket expenses.
2. While considering a private health care insurance one should consider the Tax benefit of the
policy opted by the policyholder. The government provides the tax benefit to each person, who
opts for a private insurance policy. The policy shall opt the policy consider the tax deduction
available to the person from taking insurance. Further, policyholder shall invest only in those
schemes, which provides proper investment certificate through which a person can obtain tax
benefit. Thus, the policyholder should opt the policy as per his requirement but he should
consider the tax benefit available in addition to the policy.
PART B:
Financial planning requires a person to estimate their future requirement for expense or further
investment. The most critical part in financial planning in estimating the expenses. For achieving a higher
wealth tomorrow, the person needs to restrict his expenses today. Tax laws prevalent in the country
affect financial decisions.

Investment in stock effect the financial planning of the person. The investor would invest according to
his plan. If the person is having long term plans, then he should invest in Stocks else he can opt for
Option or futures. The person should consider the risk factor in line while investing.
The investor option to invest in stocks would also affect their liquidity. The investor can enhance his
liquidity by utilizing money management and credit management. Money management is about the
amount one decides to hold and the amount to invest in short term investment. Credit management is
about at what rate one could arrange funds to meet their financial requirements. Lower the rate at
which one could arrange the funds would have a huge impact in his financial planning. The amount of
loan required is the difference between requirement and availability of funds. The investor can invest in
stock if he is sure that he can arrange funds at lower cost and can generate higher return then he should
opt the same.
The investment in stock would help a person to protect his wealth in line with time. The stock would rise
with the time index thus would help one to raise their wealth. The investor can opt the market index to
invest to meet the increase in cost of living index.
Thus, the investment in stock would affect the financial planning, liquidity management, financing and
protecting the wealth.
Part 3:
Before investing in the mutual fund, on should consider
1. Investment objective: Every mutual fund follows an objective. It would help one to determine
the feasibility of mutual fund. Choosing a fund with similar objective would help one to reach
the goals. If investor want to invest only for tax benefit, then he should invest only in tax saving
mutual fund. If the goal is higher return then opt for equity-linked mutual fund. The investor can
choose from large cap, mid cap and small cap funds. The investor should assess the fund
management style to understand how well funds are managed.
2. Fund Performance: The most important part of evaluation is fund performance. It is required to
be evaluated to get an idea of how well funds are managed and the return generated by the
fund in the past. One should look that what type of risk the fund was exposed to over the
period. Review various portfolio that the fund held and churned. It will give the entire snapshot
of the fund’s performance.