Key Facts to Check Before Buying

As with arranging any insurance policy, you must decide on the type of cover required and how much you are willing to pay it. It is also essential to be aware of the insurer's terms and conditions and claims procedure, in order to avoid difficulties or disappointments when making a claim. Policy coverage can range from only catastrophic illness to every doctor's visit. Your specific requirements will depend on your health history, the needs of your dependents and the amount of insurance you can afford.

When choosing health insurance, you should first check to see if you are eligible for group coverage, such as that available from your employer. Group coverage is usually preferable to an individual policy as it normally offers more coverage at a lower cost.

Managed care (such as a PPO or an HMO) offers good coverage at a low cost in both deductibles and premiums. However, this type of policy can be inflexible and some treatments may not be approved by the insurer. Although indemnity plans (Fee for Service or FFS) are more expensive per visit and overall, they do offer the policy holder the ability to manage their own healthcare decisions as long as it falls within the guidelines for coverage in their policy.

Limitations

There are a number of limitations included in health insurance policies; some of these may be chosen by the policy holder in order to reduce the cost of their premiums.

Lifetime Maximums

This is the maximum amount of insurance coverage that will be paid on the policyholder's behalf during their lifetime. The higher the maximum, the more potential coverage is available under the insurance policy.

Deductibles

This is the amount the policy holder must pay out-of-pocket before reimbursement of their expenses from the insurance coverage. It is usually a fixed dollar amount. The higher the deductible, the lower the premium.

Out-Of-Pocket Limits

This is the maximum amount of deductible and co-payments the policyholder will have to pay each year. The lower the annual limit, the higher the premium.

Renewability/Cancellation

Some insurance companies offer policies with a non-cancellation provision (meaning that they may only cancel coverage in the event of non-payment of premium) or on a guaranteed renewable basis. There is normally an added cost for these features.