In its simplest form, Health Insurance is a way to prioritize and control the probability that some unfortunate event takes place which affects an individual in some way. In other words, Health Insurance is a way way to manage the risk that someone may take in a future event. By “hedging” against the risk of loss of function or even life itself, health insurance can provide for the transfer of funds to help cushion the shock of that loss.
Of course to qualify for the right to insure against this loss there must be an equitable exchange. The insurance company provides the protection for the individual and the individual, in turn, pays for the protection by what is known as a “premium“, which is usually a predetermined nominal amount of money.
The individual purchasing the insurance, or rather “insurance policy” is called the “insured” or “policyholder”; whereby the insurance company is known as the “insured“. Once the insured and insurer come to an agreement the policy or “contract” comes into force. This contract can be renewed annually or monthly depending on the specifics of the agreement.
The premium or the amount that the person pays for the insurance policy is determined by a factor known as the insurance rate. This rate could be calculated based on a number of factors such as the current age, health and other risk factors of the person in question.
Although there are many types of insurance, health insurance is purchased to cover people when their health is so adversely affected they are unable to function in the same way they did previously.
A persons health could suffer from only a short term set-back of only a few weeks or so. If a person breaks a leg, their insurance policy may need to compensate them for a few months. On the other hand, a senior citizen with health insurance coverage may need long term custodial care for the rest of their lives.
A health insurance policy can be bought through a government sponsored program or through private insurance companies. Many companies provide “group health insurance” policies to their employees. In Manitoba, Canada, private individuals can purchase health insurance policies through their “Blue Cross” program. Company employees can also get free health insurance coverage through the “Sunlife of Canada”.
As to whether or not you should purchase your own health insurance policy will be discussed more fully in another article, but it could depend on your circumstances. In many cases it could just come down to how much of a chance you are willing to take if you DON’T have a health insurance policy in place.
There are many questions you may need to ask yourself to which you also need to come up viable practical answers. If you are married with small children and are the only person bringing in an income, your company may already be providing you with coverage through their group health insurance plan. If you are self-employed, you may need to decrease your risk by purchasing a plan through a private health insurance company.
If you are a person with major health issues, you would most definitely need a policy to pay for all your medical expenses. As mentioned above, a senior citizen unable to properly look after themselves may need to be cared for around the clock.
People on fixed incomes may not realize that health care costs do and have increased. A good health insurance policy in place can help you pay for those unforeseen increases in medical expenses. This can become more profound in a family setting if the health of more than one family member becomes affected.
The one thing you need to keep in mind with health insurance is not so much that it is there to cover your expenses when you need it, but rather that it is there to give you PEACE OF MIND so you can get on with your life. We all live in a world of risk. As careful as you may be, accidents and health problems will always happen. How much of a chance are you willing to take on your health?
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