If you want to spark a lively debate at your next dinner party or social gathering, just try bringing up the subject of health insurance. You will undoubtedly set off a firestorm of opinions. Years ago, acquiring your first health coverage was almost a right of passage. You began your career and you were automatically enrolled in your employers health plan after your first 90 days of employment.



That still takes place today but the health care sector has grown into a huge industry with ever increasing resources and costs to meet demand and advances in medical technology and care. This results in Policy rates increasing at an astounding pace with the result that more employers are cutting back on their plans or doing away with their health benefit packages entirely.

Naturally, this article cannot hope to tell you everything you ever wanted to know about health insurance. When it comes to health insurance there is no “one size fits all.” However, what it does is to provide you with a general understanding and enough knowledge to grasp the basics and know how to research the market to find a health plan more appropriate to your own circumstances and budget.

The most important tool you can have when looking for good health insurance is knowledge. So, before you can make any informed decisions about what type of plan is appropriate for you, we must first grasp an understanding of the complex nature of health insurance. What is it and what kind of policies are out there.

Health insurance can be defined as a legal contract between two or more parties that promises certain performance in exchange for considerations. A health insurance policy is considered a unilateral contract. This is because only one party (the insurer) is required to fulfil their obligation. While a policy owner may decide to terminate premium payments, as long as the payments are paid the insurer must meet their responsibility under the contract.

A health insurance policy can provide just one or any combination of certain benefits:

- Hospital, medical and surgical expenses resulting from sickness or an accident

- Accidental death or dismemberment

- Disability resulting from accident or sickness (sometimes this can also be referred to as “loss of income” or “loss of time”

Without stating the obvious, an accident is an injury that occurs accidentally. A sickness is an illness or disease that is not the result of an accident. Knowing the difference is important because policies may have different provisions that apply to accidents or sickness. Also, there are some companies that sell a separate accident policy that does not include sickness. The terms accident and sickness are widely used and often interchangeable in any discussion of health insurance. They are often abbreviated as A&H and A&S. Note that health insurance can also be referred to as medical insurance, especially in Europe.

As we discussed above, health insurance is designed to protect again two types of economic loss. Loss of income and expenses for medical care which places them in either of two broad policy categories:

- Disability income policies

- Medical expense policies

Disability income policies can also be referred to as loss of income, loss of time or replacement income. This type of policy will pay benefits to an insured who is disabled and can no longer work to earn a regular income. Payments can be weekly or monthly depending on the policy.

Medical expense policies are represented by a wide range of coverage from very minimal to comprehensive packages with multiple coverage. Some include both accidents and illnesses, various hospital expenses and other costs pertaining to medical care such as:

- Accident and sickness policies

- Hospital policies

- Basic medical expense policies

- Major medical expense policies

- Comprehensive medical expense policies

Any of these policies might cover various combinations of the above and may be paid in a lump sum. With Accident Policies, some cover only accidents and not illness. As you might imagine, policies like this are very specific about what is considered an accident.

It is important to understand what is defined as an accident as it pertains to the health insurance industry.. .an accident is an event that is unforeseen and unintended. Keep in mind that any discussion of this type of policy also applies to any type of policy that includes accidental coverage not just accident specific policies. Accident benefits are most commonly paid for accidental loss of life (also called accidental death), accidental loss of limb or sigh (dismemberment), loss of time and/or income, hospital expenses, surgical expenses, and medical expenses like visits to the doctor.

Let's expand a bit on dismemberment. As we said, this would be loss of limb or sight, however, different states have statutes that define dismemberment and they can vary from state to state. This is a subject that you need to discuss with your insurance agent to determine what actually constitutes dismemberment in your state.

Accidental Death Benefit can also be referred to as “principal sum.” This type of coverage should not be confused with life insurance. There is a world of difference between the two. Life insurance policies will generally apply regardless of the cause of death. An accidental benefit is paid ONLY if the death is accidental as opposed to a death by natural causes or illness. The person who received the death benefit is called the beneficiary. The policy owner has the right and responsibility of naming beneficiaries. Usually there is a primary beneficiary however he/she can assign a second and even a third beneficiary.

The primary beneficiary is the first person in line to receive the benefit in the event of the death of the policy holder. They can also name a second beneficiary who would receive the benefit in the event the primary beneficiary dies before the insured. Some policies can include a third beneficiary who would be in line after the first two.

There is much more to be learned about accidental death policies, but I would like to mention one important element before I move on. An accidental death may not be instant. A person can die as a result of an accidental injury months after the accident occurrence. Read the policy carefully because most stipulate that the accidental death benefit will only be paid if death occurs within three months of the accident.

Hopefully this has given you an overview on what health insurance is and the types of policies available.