Health insurance relates to a group of insurance policies which pay for health-related costs when the need arises and according to how each policy is written. There are many types of health insurance policies.

Why Buy Health Insurance?

The need for health insurance was recognized in the early part of the 20th century. The main reason to have it is simple: it can prevent you from facing financial ruin if there is a catastrophic illness or accident involving you or your family. At such a time, it is hard enough to deal with your health problems without the added knowledge that huge medical bills are exhausting your savings and future financial independence. You probably already know health insurance is something you should never be without.

Individual VS Group Health Insurance

There are two general categories of health insurance available today: individual and group. Generally, a good health insurance policy will cover several types of medical requirements. For physician’s fees, insurance should cover both office and hospital visits. In relation to the hospital, insurance should pay for your room and your services while there, although some treatments may be written into the policy as optional. Surgical fees and related costs, as well as lab and x-ray services, are usually covered also. There are many options that can be written into a policy. Whether you are shopping for either individual or group insurance, you should put thought into the specifics of what you and your family need.

Who Should Buy Individual Insurance?

Individual insurance is bought by those of us who have to provide health insurance for ourselves. This may be for several reasons: for instance, if we are self-employed; if we work for a small business that does not provide a health plan; if we have a family and want individual insurance. In an individual plan, you will have a premium to pay yearly and a deductible for each insured dependent, up to a base amount. This deductible comes out of your pocket before insurance will start to pay a percentage of the next medical fees. The percentage of fees or co-insurance is the amount the health plan will pay for covered expenses (often 80%), as set up when the policy is written.

If you are buying a group policy, you will have an annual premium, co-payments payable at each medical service, and a deductible payable before insurance will start to issue money for the following medical bills.

What Will My Deductible Be?

Whether the insurance is individual or group, the amount of the deductible is determined at the time the policy is written and is decided by the person, group or business which sets up the health plan. In both types, you will have out-of-pocket expenses besides the deductible mentioned above. These include the percentage of fees your plan does not pay (often 20%) and any uncovered medical services not included in your insurance policy.

Whatever health plan you have, think of it as a contract between you and your insurance company in which you both consent to all the agreements made when setting up the plan.