Health Insurance 101 - The Basics You Need to Know!

By: Shelley Hitz

Health insurance is 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 fulfill 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"

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. Health insurance is also
referred to as medical insurance.

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.

Accident Policies. Some policies 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.

About the author:
For more information, visit Shelley's website at: www.Choosing-Heal
th-Insurance.com.