What is Health Insurance?
Health insurance, like any other form of insurance, is a method of transferring risk. Specifically, the risk associated with becoming ill or injured.
Health insurance allows you to trade off a (arguably) guaranteed small amount of money each year or month, known as your insurance premium, for a potentially much larger sum of money which could be beyond your means to pay in the event you become seriously ill or injured.
Still, many Americans do not have adequate health coverage. In fact, nearly 25 percent of California residents went without health insurance coverage for all or part of 2009.
While insurance premiums may be hard to digest when we aren’t ill or injured, we typically forget all about that “wasted” money when faced with a serious medical condition.
For example, a trip to the emergency room could easily cost you thousands if you don’t have health insurance coverage. With health insurance coverage in place, a large portion of that trip would be covered, subject to a deductible.
If you don’t have health insurance, every dime comes out of your own pocket. Before you try to calculate your current monthly premium versus the ER trip, remember the keyword here is “emergency,” which means you didn’t know it was going to happen.
Let’s face it, that unexpected trip to the ER is probably not your only doctor visit each year…especially if you have children.
The early years of a child’s life requires what may be dozens of trips to the doctor for various shots and check-ups, resulting in thousands of dollars in medical expenses, which would be paid by your insurance company if you have coverage (why do I need health insurance).
Health Insurance Acts As a Safety Net
That said, health insurance was designed and is meant to be a safety net for serious illness or injury. I am not talking about strep throat or the rash you developed from eating shellfish.
Let’s look at the well known and far reaching disease cancer. According to the American Cancer Society, the direct medical costs, or the total of all health expenditures for cancer in 2009, were a staggering $93.2 billion dollars.
A large sum of money by any stretch of the imagination, most of which was paid for by health insurance companies, as many individuals aren’t able to afford the necessary treatments associated with fighting off the disease.
If your employer doesn’t provide health insurance coverage, get insurance quotes online or contact an independent insurance agent.
Read more: Check out our list of health insurance terms.