Financial Exposure

Your financial exposure is what your wallet (financial) would lose (exposure) if you have a catastrophic medical situation. The reason for health insurance is to minimize your financial exposure, because without health insurance your financial exposure is everything. A lot of people think it's best to have the lowest financial exposure you can get and request the lowest deductible possible.

A deductible is something you'll only need to pay if you have a big claim. However, your premium is something you need to pay no matter what, just to keep the insurance. Just for an easy example, we'll say that a 50 year old male is looking for a policy from Anthem Blue Cross Blue Shield of Colorado (we'll call him Larry). Larry requests a $500 deductible with $25 copays for doctors visits, $15/$40/$60 copays on Rx, and an 80/20 coinsurance with a $5,000 maximum. Right now, this would cost Larry $338.50 per month. This would give Larry a maximum financial exposure of ($500 deductible + $1,000 coinsurance + $4,062/year in premiums) = $5,562 per year plus copays if he had a catastrophic event.
As a good broker, I try to help Larry by pointing out that he can get the same exact plan with a $1,000 deductible for $291.70. This would save him ($46.80/month x 12) $561.60 per year in premiums, and give him a maximum financial exposure of ($1,000 deductible + $1,000 coinsurance + $3500.40/year in premiums) = $5,500.40 per year plus copays if he had a catastrophic event.
So in a worse case scenario, Larry would still save $61.60/year by having the higher deductible if he had a big claim every year. But in a year where he doesn't have something happen, he would save $561.60. Either way, he comes out ahead with the higher deductible. Sometimes I'll talk to people so entrenched with the idea of having a low deductible that they still choose the lower deductible when I give them an example like this. Usually, it's because they're just coming off of a group plan that had a low deductible and have it in their heads that they need to get a comparable individual/family policy.

This example is just the beginning, I'll go over the logic in choosing an HSA later.