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# Smart Health Insurance Choices

The issue of insurance has become very common this day, each and every person has taken a health cover to take care of his health expenses. The question of whether or not to take a health cover greatly depends on the extent of the cover. One may choose to take an insurance health cover that only covers minor issues such as treatment of a small accident and mere fevers that do not end up costing too much in terms of the premiums charged (Agency for Healthcare Research and Quality, 2007).

When one is faced with the option of choosing between two types of health insurance cover, there are a lot of issues to consider based on the prevailing economic circumstances and other benefits accruing by choosing a given health policy. This choice is accompanied by many uncertainties and many factors to consider before proceeding with a particular choice. The main issues to consider include the financial capabilities of a person without forgetting the benefits of either policy in question.

The first thing to consider while making the choice is the effect of the policy on a person's income, in order to ensure that one is not negatively affected by the policy took when it comes to financial issues the person should consider the percentage of his income that the policy will be covering (Agency for Healthcare Research and Quality, 2007). Basing on the period of premium payment i.e. at the end of the month or at the end of the year one should calculate the portion of salary that would be used to pay the insurance premiums (Agency for Healthcare Research and Quality, 2007).

## Calculation

### Monthly income = x

Annual income = x*12

Insurance premium per month = y

Insurance premium per year = y*12

It is important to calculate the ratio of the cost of the insurance to the income of the person. It is very important to ensure that the insurance cover does not take a huge part of the person's income

### Therefore

Ratio of insurance cost to annual income = annual insurance premium paid (12y)x100%

Annual expected net income (12x)

The above ratio can then be used to make a decision about whether or not to move on with a certain insurance cover or not.

From the above formula, we are able to assess the general capabilities concerning whether the person has the financial capabilities to take a given insurance policy to cover for his heath. This is very important since it avoids the probability of one failing to pay the required insurance amount hence revocation of the insurance contract. This is a very fundamental issue with regard to whether or not to take not only a health insurance cover but also any other insurance cover.

The issue of basing one's judgment on his financial capabilities greatly helps in ensuring that uncertainties surrounding whether or not to take a given health insurance policy since a person will immediately go to a policy bracket which will be suitable basing his judgment on his financial capability (Agency for Healthcare Research and Quality, 2007).

Disregarding the financial constraints surrounding the given insurance covers it is important to keep in mind the various advantages surrounding the insurance policy that one intends to take. It is very important for one to keep in mind aspects such as the family (Agency for Healthcare Research and Quality, 2007). With regard to family it is important to consider the fact that a person with large family will have to consider taking an insurance policy that caters for the whole family regardless of the amount of premium paid, such insurance covers are normally important since they ensure the health of any family member for who is in the same family with the person who has taken the cover (Agency for Healthcare Research and Quality, 2007). It is good to take a health policy that will ensure that one's medical expenses are well taken care of whenever a heath complication arises. The insurance cover will ensure that all the medical expenses that he would have incurred during treatment are all paid. On the other hand, there is an insurance policy they will cover only a portion of the medical expenses incurred by the person during treatment (O'Hare, 2000).

## The above should be considered basing the judgment on various issues:

1. The income of the person
2. The cost of the insurance cover
3. The health history of the person

Source: O'Hare, 2000

Another aspect to greatly consider while choosing whether or not to take a health insurance policy is that unlike other forms of insurance such as vehicle insurance Health insurance does not present a scenario where the insurer may refuse to compensate the insured basing the decision on the fact that there has been a breached of the insurance contract through issues such as faking illness (Wright, 2010). The person seeking to take the insurance cover should also consider the heath history of the family since sicknesses such as cancer are hereditary, it is also important to disclose such information to the insurer to avoid the issue of disclosure, this is because insurance contracts are greatly based on the principle of utmost good faith hence it is important to give all the information with regard to one's heath history (Agency for Healthcare Research and Quality, 2007).

Basing his judgment on the family health history the person seeking insurance should be able to take an insurance cover for his family that is in line with the family history (Agency for Healthcare Research and Quality, 2007). For example a person whose family is known to be affected with a sickness like cancer it is very important to take an insurance cover that will take care of all his medical expenses or family member hospital expenses in the event that he or any other person in the family is affected by the disease and needs treatment (O'Hare, 2000).

During the research, I found out that most people settle for the cheap insurance cover since they pay very minimal premiums (Wright, 2010). This is advantageous because it helps one save his income for other important uses and investments. However, this is a very wrong move since it may reach a point where one has too many medical expenses that the insurance cover taken cannot cover all the expenses, this is the point where each person has to consider taking an expensive cover that caters for all medical expenses (Wright, 2010). The question whether or not to take a cheap or expensive insurance cover is based on factors such as income, family health history and the size of the family (O'Hare, 2000)

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