What Is Health Insurance

An Introduction

What is health insurance? Health insurance is a form of risk-mitigation which protects the buyer against unplanned medical expenses. Just like other insurance products, the buyer has to buy this product, usually by paying premiums, which in turn will "cover" the buyer against costs incurred due to pre-specified illnesses and medical conditions. Usually medical insurance is purchased privately, but in some countries and jurisdictions, the government may provide the citizens with health insurance or medical care.

History

The first modern health insurance product were made available in the 1850s when the railway and mining workers had the option of buying what was called accident insurance. The buyers were protected from costs incurred due to an accident while on work - which was quite hazardous for both railway-workers and miners. From such beginnings the modern health insurance arose - its affect can be seen in the prevalence of disability insurance, and from the fact that health insurance is referred to as disability insurance under California State law.

Terms

Here are some of the well known concepts and terms from the domain of Health Insurance:

• Cover this is the maximum sum that the provider will provide for the wellness of the policy-holder.
• Premium This is the sum that the policy-holder, who is the buyer, pays to the provider for the cover provided
• Deductible This is the sum that the insured shall have to pay before the provider starts paying their expenses in a given year. This can be a flat sum, such as $500, which the insured would need to spend before they get any expenses covered. A related term is Co-Payment, which is the sum that is paid by the insured as part of a single visit to a doctor etc.
• Exclusions There are diseases or services that are not covered by a particular insurance policy. The insured will have to pay for them completely out of their own pocket.
• Comprehensive vs Scheduled Insurance Comprehensive plans pay for the medical costs for the insured after a deductible has been paid by them. These can cover catastrophic events as well as normal day-to-day expenses. In comparison, Scheduled Plans are a watered down insurance plans that only pay to a limited extent, and are usually supplemental to the comprehensive insurance plans.

All these will vary from plan to plan, and to know more about your plan, refer to the offer document.

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By Donnie Otis