Definition of Terms
Insurance – An arrangement or contract in the form of a policy by which a company or ”state undertakes to provide a guarantee of compensation for specified loss, damage, illness or death in return for the payment of a specified premium”.
Premium – Amount to be paid for an insurance contract.
Health Insurance – A type of insurance coverage that pays for medical, surgical, prescription of drug, pre-hospitalization, post-hospitalization, and sometimes dental expenses. It can also reimburse the insured costs incurred in treating an illness or injury.
Provider- A term used by insurers to describe a clinic, hospital, doctor, laboratory, health practitioner, or pharmacy that treats an individual.
Life has taught us, especially in the era of a pandemic like the COVID- 19, that it is good to plan ahead for any eventualities like illnesses or catastrophic events such as car accidents. These health events are rare and difficult to predict. However, when they happen, the costs of treatment are far beyond most people’s means. The narrative of ‘each person’s or family’s poverty is one medical bill away’ is true, especially if the primary breadwinner’s ability to work is compromised by illness.
Health is defined by the World Health Organization (WHO) as ”complete physical, mental and social well-being and not merely the absence of a disease”.
For a business to operate well, it requires input and presence of the owner who should be in good mental and physical health. In a family, there is always peace and happiness whenever everyone is in good health. With the rising cost of healthcare as well as the evident need for adequate health care today, it is wise to invest in health insurance to enable the insured to get a guarantee of their health safety against uncertainties from the insurer.
There are many dimensions of health wellness which include;
- Physical wellness
- Mental health
- Spiritual wellness
- Financial wellness
- Environmental health
- Intellectual health
- Social health
Difference between Medical and Health Insurance
Although the words medical insurance and health insurance are often used interchangeably by many people, there exists a slight difference between them.
A Medical Insurance provides limited coverage to hospitalization expenses and treatment towards pre-specified ailments and accidents for a pre-specified amount. Medical insurance policy claims can be in two forms; Cashless, where the insurer pays all the hospitalization expenses incurred by the insured directly to the service provider or reimbursement, where the insured informs the insurer about hospital admission, pays all costs related to treatment and provides the bills to the insurer for refund. These payments and reimbursements are based on the sum assured.
Health insurance, on the other hand, provides the insurer with comprehensive coverage against hospitalization expenses, pre-hospitalization, and post-hospitalization expenses like ambulance charges. It offers extra coverage such as critical illness like cancer, heart attack, and accidental disability.
The four common Health insurance Plans are;
- Preferred Provider Organization (PPO) Health Insurance Plans- This plan allows the insured to visit whatever in-network healthcare provider he/she wishes without first requiring a referral from a primary care physician.
- Health Maintenance Organization (HMO) Health Insurance Plans- The plan limits coverage to care from doctors who work for or contract with HMO. It does not cover out-of-network care except in an emergency.
- Health Saving Account (HAS) -Qualified Health Insurance Plans- HAS is a personal account that an owner can use to pay for health care. Its benefits include tax- free withdrawals to help finance medical bills.
- Indemnity Health Insurance Plans- This plan allows the insured to direct his/ her own health care and can visit any doctor or hospital they like. The insurance company then pays a set portion of the insured’s total treatment charges.
Benefits of a Health Insurance Policy
1. Comprehensive health insurance covers pre-hospitalization and post-hospitalization for a specified number of days according to the insurance policy taken by the insured. This means the insured does not have to worry about transport costs and other daycare procedures expenses.
2. Lifestyle ailments have become very common. With a health insurance policy, the insured can easily get cashless treatment in a pool of hospitals just in case they contract such ailments.
3. Health care is becoming increasingly expensive. In case of an ailment, it may lead to an individual or family using all their hard-earned savings.
4. Hospitalization Daily Allowance- Some health coverage companies pay a specific allowance to the insured for each day he/ she spends in the hospital. These allowances are very beneficial in cases of emergency, especially where the hospitalized individual is the primary breadwinner in the family.
5. It provides a flexible and friendly policy to individuals with a critical illness such as cancer, which they would not get with the common available medical insurance policies.
6. Most Health Insurance companies provide their customers with free check-ups.
7. A comprehensive health coverage policy provides a co-payment option where, in case of treatment, the insurance company will bear some of the expenses while the remaining expenses are paid by the person insured.
8. Profitable deal- Acquiring a health coverage policy early at a young age gives the insured opportunity to get a good deal at a low premium since the chances of falling ill at a young age are few.
9. A health insurance cover gives the insured opportunity to have an individual tailor-made policy that uniquely fits their needs. Insurance companies and agents such as myprivatehealthinsurance.com help individuals maximize benefits in health coverage while minimizing premiums and out-of-pocket costs.
10. Cashless claim services- In emergency cases, the insured can use the cashless hospitalization facility provided by the health insurance company to access treatment in the hospital without paying. The insurance company settles the claim later with the hospital.
The disadvantage of a Health Insurance policy
- A health insurance policy can be costly, especially for low-income earners.
- Individuals with pre-existing medical conditions have to wait for a certain period while submitting their premiums before benefiting from the policy.
Different insurance companies have different benefits, and the individual must make a wise decision before purchasing any policy. It is also important to note that health coverage policies have different benefits with varying premiums.