How a health insurance policy works
A typical policy would list down the conditions where the insurer would make a payout to cover the costs involved in relation to the medical care received by the insured and or his family.
When you go visit a doctor or a hospital when you get hurt or sick, you accumulate medical bills. With health insurance, the insurer will take off some of the burdens of paying these bills by paying a portion of the amount. How much that portion is and under what conditions will the insurer agrees to make payments will be spelt out in the policy.
Difference between health insurance vs. life insurance
Health insurance provides you protection against medical costs, which you do not expect, and also allows you to get immediate access to medical care. This means you do not have to produce money right away to go visit a doctor or a hospital because you got sick or you got hurt. Life insurance, on the other hand, will give your named beneficiaries a pay-out in the event you die.
What health insurance covers?
Generally, it covers medicines, surgeries, psychological care, visits to doctors or emergency rooms, routine tests and vaccinations, etc. In some cases, you may be required to shoulder a portion of the costs on top of the premium payments you make. There are also policies that have greater coverage including vision and dental care.
What does health insurance not cover?
What it is not covered in a health insurance policy are termed as “exclusions” and this could include the following: suicide or any self-inflicted injury, cosmetic surgery, sexually-transmitted diseases, experimental treatments, preexisting medical conditions, and vision correction? Exclusions may vary from policy to policy.
Categories of health insurance policies
There are three general categories of health insurance policies:
Reimbursement or indemnity– these plans allow the consumer to select their own doctors. Coverage may be total or a portion of the expenses, or it may be a limited amount daily for a specific number of days.
Managed care plans- Such as point of service, preferred provider organisations and health maintenance organisations plans – these policies usually offer wider coverage. Generally, under these plans, the insurance company has a tie in with selected health-care or medical providers such as hospitals and doctors. The insured individual may seek services outside of the select network of medical providers, however, coverage will be usually lesser than when that provided in-network.
Government-sponsored plans– These are programs implemented by the government, which provides health insurance to certain sectors of society.