Definition of Health Insurance

Health insurance is an insurance policy that pays benefits to the insured if the insured is unable to perform normal work due to illness, or if the insured becomes disabled or dies due to illness during the insurance period. The premium rate of health insurance is closely related to the age and health condition of the insured, and insurance companies often require medical examination of the insured, stipulate observation periods or agree on deductibles, and are relatively strict in underwriting. Therefore, it is in your best interest to buy it while you are young and healthy.

Health insurance includes medical insurance, disability income insurance and long-term care insurance. The most common types of health insurance include sickness insurance and accident insurance.

Types of health insurance
Health insurance is based on the insured’s illness as an insurance incident, and can be divided into three types according to the payment method.
1、Payment type, the insurance company pays the insurance benefit to the insured in accordance with the contract when the insured suffers from the disease agreed in the insurance contract or the situation agreed in the contract occurs. The number of insurance benefits is determined, and once diagnosed, the insurance company pays a lump sum in accordance with the insurance amount contained in the contract. The critical illness insurance of each insurance company is of the payout type.
2. Reimbursement type, the insurance company reimburses the insured according to the proportion agreed in the insurance contract according to the actual medical expenses incurred by the insured. Such as hospitalization medical insurance, accidental injury medical insurance, etc. are of the reimbursement type.
3、Benefit type, the insurance company pays the insurance benefits according to the actual number of days the insured was hospitalized and the operation items. The total amount of benefits varies depending on the number of days of hospitalization and surgical procedures. For example, hospitalization medical allowance insurance and hospitalization peace of mind insurance are of the benefit type.

Classification of health insurance
1. Sickness insurance that pays benefits based on illness (critical illness insurance). In other words, if the insured person suffers from a disease listed in the insurance terms and conditions, he or she will receive a fixed amount of compensation from the insurance company regardless of whether or not he or she incurs medical expenses or the amount of expenses incurred.
2、Medical insurance that pays benefits based on the agreed medical expenses. In other words, the insured will be compensated by the insurance company according to a certain percentage and limit when receiving medical services.
3、Income protection insurance that pays for the interruption or reduction of income due to accidental injury or disease. The insurance company will compensate the insured for the loss of income according to the agreed standard when the insured’s working ability is lost or reduced due to accidental injury or disease.

Features of health insurance
1. Continuous clause
The term of health insurance is usually one year. The general terms of health insurance policies state under what conditions the policy expires and under what conditions it can be automatically renewed, in the following common ways.
(1) Term policies. This type of policy specifies the period of validity and once the period expires, the insured must re-enroll. During the term of the policy, the insurer cannot initiate a cancellation or termination of the contract, nor can it request a change in premium or liability. However, when the insured re-insures after the expiration of the contract, the insurer has the right to refuse coverage or request a change in premium or liability.
(2) Cancellation of the policy is possible. For this type of policy, the insured or the insurer may at any time propose to terminate the contract or change the premium as well as the conditions of the contract and the scope of coverage. However, when the insurer proposes to terminate the contract or change the contract terms and conditions, the scope of coverage, for the insurance accident that has occurred and has not yet been processed, the original contract terms and conditions, the scope of coverage shall still be responsible. The advantage of this type of policy is that the insurer bears little risk, so its cost is low, and the requirements for underwriting conditions are not strict.
(3) Renewal of insurance. When the insured renews the policy, there are generally two different kinds of renewal terms, one is conditional renewal. As long as the insured meets the conditions set forth in the contract, he or she can renew his or her contract until a specific time or number of years. The second is guaranteed renewal. This type of policy provides that as long as the insured continues to pay premiums, his or her contract may continue in force until a specified age. During this period, the insurer cannot unilaterally change any of the conditions in the contract.
(4) Non-cancellable clause. It means that neither the insured nor the insurer can request to cancel the insurance contract, and the insured cannot request a refund. However, if the insured cannot pay the premium, then the insurer can automatically terminate the contract.

2. Strict underwriting conditions
Health insurance underwriting conditions are generally stricter than life insurance. Since disease is the main risk of health insurance, the factors that cause disease need to be examined quite strictly, usually based on the insured’s medical history, understanding the insured’s past and present medical history, and sometimes the insured’s family medical history.
The insured’s occupation and the geographic location and lifestyle of his or her residence are also evaluated. In terms of underwriting criteria, there are generally several provisions.
(1) Observation period. Since it is difficult to determine whether the insured has suffered from certain diseases based on previous medical records alone, in order to prevent insured persons who have already suffered from diseases from being insured, an observation period or exclusion period is sometimes specified in the policy, which is generally six months.
(2) Sub-fitness policy. For the insured who cannot meet the physical fitness requirements stipulated in the standard terms and conditions, the policy is generally covered under a sub-health policy, which may be covered in two ways: either by increasing the premium or by re-defining the scope of coverage, such as by excluding certain diseases or certain insurance liabilities as endorsements before coverage.
(3) Special disease policies. For special diseases suffered by the insured, the insurer formulates a special clause to cover the specified special diseases.

3. Deductible clause
Deductible clauses are one of the main features of medical insurance, and such provisions are beneficial to both the insurer and the insured. In the case of medical expenses, the policy provides for a deductible, which is the minimum limit for the payment of insurance expenses. The insurer is only responsible for the excess of the deductible.

4. Benefit conditions
The insurer will pay for reasonable and necessary expenses in the event of a health insurance accident.

5. Insurance rates
Health insurance rates are determined based on the insured’s occupation, gender, age, amount of insurance and type of benefits.