A Plain Language Guide – How To Buy Health Insurance
There are four basic types of health insurance, each with their own unique qualities. As we move through the stages of our lives, different types of insurance become important. This guide will give you a better understanding on how to buy health insurance that´s right for you. Be sure to buy with the facts in hand.
Medical Expense Insurance
This type of insurance pertains to the treatment and prevention of accident or illness. A typical policy covers things like doctor visits, in-patient hospital visits (including treatment and surgery), x-rays and lab tests.
If the insured has coverage elsewhere, supplementary medical expense insurance may cover additional expenses like dental work, glasses and contacts, prescription drugs, etc. In some cases, major medical expense insurance is necessary to cover long-term hospital stays from major illnesses like cancer and heart disease.
Disability Income Insurance
When an illness or accident prevents the insured from working, disability income insurance provides a supplementary income, usually monthly, so that the insured can maintain their usual standard of living. The policy is uniquely tailored to the insured’s working situation, income and lifestyle.
When purchasing disability income insurance, it’s important to specify whether disability refers to the insured’s inability to do their current profession, or inability to do any profession. Premiums will be significantly higher for the former. When disability occurs, there is usually a waiting period before the policy pays out, sometimes up to 120 days. Premiums are paid during this period, but refunded when the policy pays out. The cost of the policy is influenced by the length of the waiting period.
Long Term Care Insurance
When a person is no longer able to dress, feed and bathe independently, long term care insurance covers care in a nursing home, assisted living or home care. Sometimes this may even include a private nurse onsite 24/7.
It is important to buy this type of insurance relatively early in life – well before the typical cut-off age of 65 – since it becomes increasingly more expensive as a person ages. Premiums are based on age, health, length of time the benefits pay for, length of waiting period and inflation.
Critical Illness Insurance
Unlike disability insurance, critical illness insurance pays a lump sum in the event of illness, usually within 30 days. A typical policy covers cancer, stroke and heart disease, but enhanced policies are available that cover a more comprehensive range of illness and disease.
If the patient does not live 30 days, the insurer typically refunds the premiums to the beneficiary, though doctors will often work to help families receive the benefit by keeping the insured on life support, if possible. If the patient recovers, they do not have to return the lump sum payment. Buy early: Critical illness insurance can cost twice as much for a person in their fifties, compared to a person in their forties.
Hospital Cash Benefit
Often seen as an add-on to a critical illness or disability policy, the hospital cash benefit provides a cash payment for every day the insured is confined to a hospital, to a maximum number of days per year.
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