Do I Need Health Insurance?

Health insurance, also known as "illness insurance". Refers to life insurance paid by the insurer to the insured when the insured suffers a physical illness. Health insurance coverage usually includes medical expenses, loss of income, funeral expenses, and survivors' living expenses. This type of insurance is mostly co-organized with injury insurance, and some are co-organized with life insurance. In order to prevent moral hazard, when applying for health insurance, the insurer usually stipulates a period of trial insurance. The insurer shall be liable for losses caused by the insured after the period of illness. ^[1]

Health insurance

Health insurance, also known as "illness insurance". Refers to life insurance paid by the insurer to the insured when the insured suffers a physical illness. Health insurance coverage usually includes medical expenses, loss of income, funeral expenses, and survivors' living expenses. This type of insurance is mostly co-organized with injury insurance, and some are co-organized with life insurance. In order to prevent moral hazard, when applying for health insurance, the insurer usually stipulates a period of trial insurance. The insurer shall be liable for losses caused by the insured after the period of illness. ^[1]

Many on the market

(I) Duration of insurance

Except for major illness insurance, most health insurance, especially medical expense insurance, is often a one-year short-term contract.

(B) Actuarial Technology

The pricing of health insurance products mainly considers the disease rate, disability rate and duration of illness (disability). The calculation of the health insurance premium rate is based on the loss rate of the insurance amount. At the end of the year, the reserve for unexpired liabilities is generally deposited at a certain percentage of premium income for the year. In addition, the waiting period, exemption period, deductible, copayment ratio, payment method, and payment limit will also affect the final rate.

(3) Payment of health insurance

Regarding the question of whether the compensation principle applies to health insurance, it cannot be generalized. The application of this principle to fee-based health insurance is a compensatory payment; fixed-value health insurance is not applicable, and the payment of insurance benefits has nothing to do with actual losses.

(IV) Particularity of operating risks

Health insurance deals with the risk of injury and illness. Its influencing factors are far more complicated than life insurance. Adverse selection and moral hazard are more serious. In addition, the risks of health insurance also come from medical service providers. The quantity and price of medical services are largely determined by them, and it is difficult for insurance companies as payers to control them.

(5) Cost sharing

Because health insurance is risky, difficult to control, and unpredictable, insurers often have many restrictions or restrictions on their liability to pay medical insurance premiums for illnesses.

(6) Particularities of contract terms

Health insurance does not need to specify a beneficiary, and the insured and beneficiary are often the same person.

In the health insurance contract, in addition to the irrefutable clauses of general life insurance, grace period clauses, and no loss of value clauses, some special clauses are also used, such as existing condition clauses, conversion clauses, coordinated payment clauses, physical examination clauses, deductible Terms, waiting periods, etc.

(VII) Excluded Liability for Health Insurance

Exclusions for health insurance generally include war, military operations, illness, death and disability caused by intentional suicide or attempted suicide, illness, disability, abortion, death, etc. caused by abortion.

The factors that determine the rate of health insurance mainly include: the incidence of disease, the incidence of disability, the duration of disease, the interest rate, the cost rate, the failure rate, the mortality rate, and so on. Other factors, such as business practices, underwriting habits, claims principles, and the company's main goals, will also affect health insurance rates. Changes in conditions such as hospital management and medical methods, economic development, and geographical environment also have an impact on our prediction of future claims, but these factors are not easy to predict completely and accurately.

Uniform rate principle

2. Tiered rate principle

3. Year-by-year variable rate principle

4. The principle of balanced insurance premiums

Although the above various methods have their own advantages, they must also consider issues such as risk estimation, payment of fees, profits, and other passive safety factors.

For the insured who can not meet the physical health requirements specified in the standard clauses but can be covered conditionally, they can be covered according to the substandard medical insurance policy. The methods often used in formulating the rates are:

(1) Reduction of policy income payment period

(2) Reduce policy income

(3) Increase the waiting period

(4) Exclusion of liability or limited guarantee, etc.

For one-year or short-term health insurance, non-life insurance is often used to accrue liability reserves. For long-term health insurance, the probability of loss is related to age. Therefore, life insurance is used to accrue liability reserves.

On June 12, 2006, the Office of the Chairman of the China Insurance Regulatory Commission reviewed and approved the Measures for the Administration of Health Insurance, which came into effect on September 1, 2006.