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Health insurance: when comprehensive isn’t really comprehensive at all

Health Insurance

James Thomas of Acuma paints a clear picture of the underlines of the world's health insurance policies...

October 16, 2012 2:54 by

Most reasonable health insurance policies will cover you for serious illnesses and accidents. They will generally also cover minor issues that might just require a visit to the doctor. This is all well and good, and exactly what the policy is designed for.

However, there are a few other areas of cover that I regularly get asked about, and have to explain why they are not included, or if they are why the cost so much. I am of course referring to routine treatment. That can be routine well person check-ups, dental treatment, eye tests and glasses, and maternity cover. As a lot of us are expatriates here, some or all of these treatments are covered in our home countries, and it can be a shock to find that they are not covered here.

Before I go on, I would like to share two definitions that are central to the discussion;

Insurance: This is a form of risk management primarily used to protect against the risk of a possible, uncertain event or loss. Insurance is the process of transferring risk from one person to another, generally in exchange for a payment. An insurer is generally a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium.
Assurance: This is the coverage of an event that is certain to happen. Assurance is similar to insurance (and sometimes the terms are interchangeable) except that insurance protects policyholders from events that might happen.

As you can see, while the words and indeed the meanings are very similar, the actual meaning is very different. This is crucial to the way that all insurance premiums are calculated. The analogy that I often use relates to car insurance. If you were to ring up your insurance company, ask for a quote for car insurance and tell them you were going to crash your car today, what do you think it would do to the premium? This may sound flippant, but it does hopefully show, in very basic terms, how medical insurance premiums are calculated.

If we go back to the areas of cover that are generally covered, you can see that this is a form of insurance. The medical underwriter can assess based on a number of factors the cost to insure someone of a certain age. They will have a lot of data that they can refer to, and sad though it is, they can work out the changes of a person being diagnosed with cancer, or having a stroke or indeed having a car crash. And fortunately for us, the chances are relatively low, which is why the cost to insure against these events are also relatively low – with the caveat that age will affect some of these things and so the cost to insure will account for that.

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