Meaning and Definition of Health Insurance

Meaning of Health Insurance

• Health insurance helps manage unpredictable future medical expenses, such as illness, injury, or accidents.
• Unexpected events like surgeries, hospital stays, and doctor visits can lead to significant costs.
• Insurance pools financial risk by spreading costs of medical expenses among many individuals.
• This distributes the costs over time through pre-payment.

Definition of Health Insurance

• Health insurance is a method to distribute the financial risk related to healthcare expenditures.
• It involves pooling the costs of many individuals to cover the potential expenses of any one person, over a certain period.
• The system collects premiums (pre-payment) from many individuals and pools those funds to meet the medical needs of any one individual.
• It is similar to other types of insurance but focuses primarily on health-related expenses.

Commercial Health Insurance

• Private health insurance (commercial) is offered by private insurance companies.
• Public sector insurers may also offer health insurance, but it's usually categorized as private because it's funded by individuals.
• Coverage under a commercial policy can be tailored towards specified healthcare services.
• The agreement between the insurer and insured details the types of services covered, and the terms for reimbursements/payments.

Explore the concepts of health insurance, including its role in managing medical expenses and the principle of pooling financial risk. Learn how health insurance works, the importance of premiums, and the distinction between public and private health insurance. This quiz will help deepen your understanding of health-related financial protection.