Health insurance is a kind of insurance which covers an individual’s entire or a portion of his potential risk to incur health expenses. Like all other forms of insurance, the premium that has to be paid by the insured is risk among most people. This implies that the likelihood of an insured individual incurring some kind of health expense increases every year, and the insurer has to make up for this increased risk by increasing his premium. The insured is, however, not told of this risk fact until he goes for an insurance policy. Health insurance may, therefore, be the most important type of insuring one’s health – next to life insurance.
The kind of health insurance required by an insured person depends on his occupation and his choice of work. In a very general sense, the occupation which is considered to determine the kind of health insurance required by an individual includes his profession (e.g. doctor, lawyer, accountants), his residence (e.g. resident, non-residential, hospital), and his medical history (e.g. whether he had undergone any major diseases in the past).
The costs of health insurance are calculated according to the insured’s lifestyle. For instance, if the insured spends most of his time at the office of his profession, then his chances of receiving expensive medical treatment would increase. But this does not mean that he would have to go for expensive treatment. He could simply stay at home and take whatever simple medication he needs.
However, the situation is very different if the insured spends most of his time outside the office of his profession. In such a case, his illness will not be easily cured even with modern medical technology. His illness will most probably lead to disability. The kind of health insurance covers which will be best for him accordingly will depend on his case. The type of coverage must pay the greatest part of his medical care costs in order to make sure that he gets the best treatment.
Another factor that determines the amount of health insurance coverage that the insured requires is his annual income. There are different kinds of health insurance coverage policies applicable to different individuals. Some policies cover the insured’s expenses incurred for health care in the event of an accident, while some cover only a specified number of visits to the hospital. Some policies limit the number of visits to the hospital during a year. And some policies do not limit the number of visits but only require the insured to get a medical examination after a specified period of time. All these aspects affect the way the health insurance coverage pays the expenses incurred by the insured.
The health insurance premium charged by the insurer is determined by analyzing his lifestyle as well as the medical expenses incurred by him. Different kinds of health insurance policies have different ways of charging premiums. Some insurers base the premium on the age of an individual. Other insurers base it on the amount of claims, the insured has filed in the past few years. And some insurers even charge more to the oldest age group of their client.