Medical insurance is an agreement between a private insurance company and a policyholder that covers a portion of the costs of health care. The contract can be individual, group or national in scope. It can be renewable or lifetime in nature and may have specific terms, conditions and coverage limits. The premium is a set amount the insured pays to obtain the benefit of the insurance. The actual cost of the coverage depends on a variety of factors including, but not limited to, the deductible and coinsurance. Many private insurance companies have a network of healthcare providers from which the insured can receive treatment. This is often referred to as managed care.

In some countries, people are required to have health insurance. In others, it is voluntary. The most important factor influencing whether individuals obtain health insurance is the availability of affordable options. People who are poor or who have a preexisting condition often find it difficult to purchase an individual policy. Individuals with a low income are eligible for government-sponsored coverage under Medicare and Medicaid.

Generally speaking, the benefits of having a health insurance plan are numerous and can be quite extensive. In addition to helping cover the cost of routine doctor visits, most plans pay for most preventive services like annual checkups and vaccinations. Some plans even pay for dental and vision care at a reduced rate. In most cases, once the deductible is met and the coinsurance percentage has been reached, health insurance will cover 100% of any further costs.

For people who are at a high risk of developing certain illnesses or are concerned about gaps in their current coverage, there are also catastrophic health insurance plans available. These plans provide a lower level of coverage but are relatively inexpensive and offer peace of mind in the event of a major accident or illness.

There are also short-term health insurance plans available that can bridge gaps in current coverage. These plans typically provide coverage for a few months to a year and are less expensive than regular health insurance.

Some health insurance policies include critical illness cover at an additional cost. This is designed to help the policyholder in the event of a serious illness such as cancer or kidney failure. These issues can be very expensive to deal with and manage long-term, and this cover offers a lump sum payout should you be diagnosed with one of the covered illnesses.

There are a number of different types of health insurance available, ranging from basic hospitalization coverage to comprehensive health maintenance organizations (HMOs) and provider-based plans such as PPOs, EPOs and POS. Each type of plan has its own benefits and costs, and the exact terms of each are spelled out in a member contract or “Evidence of Coverage” booklet for private insurance, or in a national health insurance policy for public insurance. Some of these plans require the insured to use a designated network of healthcare providers or have prior authorization for treatment.