The importance of health insurance

Whether a routine checkup, a cold or illness, seeing a specialist, or going to the hospital, there is a high likelihood that you will need to use your health insurance at some point.

The reason health insurance is so important is because of the rising cost of medical care, especially hospital bills. What they don't always tell you about health insurance is that, in many ways, it should really be thought of as “hospital insurance.” A routine doctor visit may cost $20, but a major hospitalization can cost tens, or even hundreds of thousands of dollars.

The real purpose of health insurance is to protect you from the financial consequences of a major medical claim.

The rising cost of hospital bills is directly reflected in the increasing cost of health insurance premiums. This is why it is more important than ever to understand your health insurance policy and how your coverage actually works.

Health insurance is needed to help protect you from a catastrophic medical claim and put a defined limit on how much you may be responsible for under your policy. Having health insurance is not enough. You need to understand what your policy covers, what it does not cover, and what happens if you receive care from an out-of-network provider.

Unfortunately, many people do not fully understand their health insurance coverage until they actually need to use it. By then, it may be too late to discover that their policy does not provide the level of protection that they thought it did.

This is why understanding your health insurance policy matters. Knowing what you are paying for and what your financial responsibility could be in the event of a major medical claim can make a significant difference.