How Health Insurance Works

Nearly 15% Americans did not feel the need to lay their hands on a health insurance policy until the year 2006. However, with growing awareness, there is only a small chunk of people who are depriving themselves from the benefits of health insurance for reasons best known to them. One can't avoid the fact that the health care cost have surged hugely in the last few years, despite the crumbling economies across the world. As a matter of fact, the amount of money spent on health care by Americans is estimated to be more than four times the money the United States government spends on defense of the country.

There are lots of unanswered questions which keep patrolling in the minds of most policy owners out there. For instance, people do not have a clear idea about what exactly they are paying for? What happens to the premium if one does not fall sick? Which plan to choose? The abundance of contradictory information prevailing in the market can quiet easily leave you in a bewildered state of mind. Let's unveil some of these information, so that your head stops swimming.

Most of us know what gambling is all about. You shave off some money in the hope that you will get more in return. Insurance is like gamble you play with the insurance company. The insurance company bets that they will end up gathering more money with premiums, than paying off the availed benefits by the policy holders.

To be pointblank, it's a contract between an individual and the insurance company that agrees to pay your medical expenses, whenever you fall sick. Depending upon the type of health policy you choose, some companies will also pay for your annual tests or immunizations, so that you don't fall sick. However, the amount and circumstances under which you will be paid would vary based on the policy you choose for yourself.

The contract will cover every detail about the health insurance coverage. One needs to understand the coverage part very clearly, or else the insurance claim might not get approved. For instance, you will have to pay certain amount of deductible amount first, before the insurance company reimburses your expenses. Deductible amount is a kind of co-payment which is not reimbursed by the insurance companies.

Some policies may require you to pay a certain percentage of the expenses in addition to the deductible amount. Also, in most cases, there is a limit to the maximum amount you will be covered by the insurance company. For example, if the maximum amount cap is $10,000. You will be paid only $10,000, even if your bill soars over $15,000.

Each policy will state the amount of money you will have to pay towards the premium, and the total amount the insurance will cover during the life of the policy.

Remember, a single hospital visit can disfigure your savings within no time. Many of us can't afford to stay away from a health insurance policy, despite being healthy.