What Is Health Insurance? Definitions and Types Explained
What is health insurance? See how social, private and commercial plans differ, what experts say about it, and why inpatient coverage is worth choosing.
Health insurance matters because it can cover hospital bills and the cost of treatment. Hospital costs are not small, and they climb every year while incomes do not keep pace. Because of those rising costs, many people struggle to pay, and savings often fall short of what treatment requires. People are also vulnerable to illness, and health today depends heavily on the environment, climate, weather, and the food and drink we consume. Many kinds of food and drink are harmful, and without care they can cause serious disease. That is why people need this kind of insurance. So what is health insurance? Here are the definitions:
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Health Insurance in General
In general, health insurance is a binding agreement between the policyholder and an insurance company, set down in writing. The policyholder pays a premium in an amount agreed in advance, and the insurer bears the risk if the insured person named in the policy suffers an unexpected event as described in the policy.
Social Health Insurance
There is also social health insurance. It is a mechanism that pools funds through compulsory contributions to protect you and your family from a range of risks. Participation is mandatory so that health costs can be kept down.
Private Health Insurance
Private health insurance is run and owned by private entities. The advantage of joining is good quality of service, even better than government-owned health insurance. The drawback is that it is hard to monitor how the insurance funds are managed.
Commercial Insurance
Commercial health insurance is a voluntary agreement made at an individual's own wish. Its purpose is to protect yourself against the various possible risks of loss caused by certain events.
Health Insurance According to Experts
Several experts have offered definitions and explanations of health insurance. One is Prodjodikoro (1996), who described insurance whose main concern is health as an agreement between two parties, the insured and the insurer. The insurer reimburses the cost of losses caused by something uncertain and unexpected, while the insured party must pay a premium every month.
Types of Health Insurance
Once you understand the full definition of health insurance, it is important to know its types. By type of care, health insurance divides into two kinds: outpatient and inpatient. Choose inpatient coverage, because inpatient costs are far higher than outpatient costs.
It is not enough to understand the definitions of health insurance. You also need to choose the type of insurance that fits your needs so you get the protection you expect.
