Why Buy Health Insurance?

The need for health insurance was recognized in the early part of the 20th century. The main reason to have it is simple: it can prevent you from facing financial ruin if there is a catastrophic illness or accident involving you or your family. At such a time, it is hard enough to deal with your health problems without the added knowledge that huge medical bills are exhausting your savings and future financial independence. You probably already know health insurance is something you should never be without.

Individual VS Group Health Insurance

There are two general categories of health insurance available today: individual and group. Group insurance offers medical insurance to members of groups like employees of a company or members of an association. Individual policies were designed to provide insurance to unemployed or self-employed or to individuals that aren’t offered coverage by their employer. Whether you are shopping for either individual or group insurance, you should put thought into the specifics of what you and your family need and what will work best for you.

Most group health policies and many individual policies fall under the category of major medical policies. Major medical policies are more expensive because they provide more benefits than basic policies. A major medical policy normally pays a percentage of covered expenses (for example 80%), after you pay the deductible. The remaining expense (20%) is considered to be coinsurance and is paid by you.

Types of Coverage

There are several types of medical insurance you can consider, some of which are:

    • HMO (Health Maintenance Organization): These are prepaid health insurance plans. You pay a monthly premium and the HMO covers your doctor’s visits, hospital stays, emergency care, surgery, checkups, etc. You must use the doctor and hospitals designated by the HMO.


  • PPO (Preferred Provider Organization): A combination of traditional fee-for-service and an HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered in network with a lesser amount paid out of network. This is currently the most popular plan of choice as it allows more freedom in choosing your provider.

There is also the HSA (Health Savings Account) which has become a more popular choice. It is a tax-favored savings account that must be used in conjunction with an HSA-compatible high deductible health insurance plan into which you can deposit funds to use on medical expenses. The HSA provides the benefit that any funds used on allowable medical expenses are tax-exempt, allowing you to save a high percent of your costs over time. Contributions to an HSA may be made pre-tax, up to certain limits. The unused HSA money left at the end of the year is never lost. The balance rolls over each year.

When you purchase health insurance policy it should be based on your needs. We would be please to assist you in providing you a quote or speaking with you about what type of coverage would be the best for you.