Identifying Your Health Insurance Needs

Health insurance is a type of insurance whereby the insurer pays the medical costs of the insured if the insured becomes sick due to covered causes, or due to accidents. The insurer may be a private organization or a government agency. Market-based health care systems such as that in the United States rely primarily on private health insurance.

The largest difference between private sector health insurance and life insurance is that for life insurance, a person may purchase guaranteed renewable insurance for the whole of the insured's life at a constant premium rate, while health insurance is generally purchased year by year with generally no assurance of renewability and if renewable no guarantee that premium rates will not increase.

Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, and has the person ever been treated for any of a long list of diseases. Applicants can get discounts if they do not smoke and live a healthy lifestyle, which might encourage some people to quit smoking or make other improvements in their lifestyle. The medical history is also used to screen out persons with pre-existing medical conditions.

A health insurance policy is a legal, binding contract between the insurance company and the customer. Many insurance companies purchase re-insurance to protect themselves from a catastrophic loss due to an unforeseen event.

Critics of private health insurance claim that this conflict of interest between the needs of insurance companies to remain solvent versus the needs of their customers to remain healthy is why state and federal regulation of health insurance companies is necessary. Some say that this conflict exists in a liberal healthcare system because of the unpredictability of how patients respond to medical treatment, but proponents of regulation argue that too many health insurance companies put their desire for profits above the welfare of the consumer or patient.

The following is a hypothetical example of a situation that might confront an insurance company: Suppose that a large number of customers of a particular insurance company contracted a rare disease and the hospital charged 10 million dollars a patient to treat them. The insurance company would then be faced with a choice of paying all claims without complaint (thus losing money and possibly going out of business) or denying the claims (thus outraging patients and their families, discouraging potential customers, and becoming a target for lawsuits and legislation).(Wikipedia)

This Month's Submitted Article

Surveys of self-employed individuals consistently show that one of their major concerns is the ability to buy affordable health insurance. One in 4 self-employed persons has no health insurance today even tough more than 70% of these people could afford to buy high quality health insurance if they had an effective buying strategy.1. Have a budget and
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