Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Health Insurance

What it is:

Health insurance is insurance that covers some or all of the costs of an individuals healthcare.

How it works (Example):

Health insurance absorbs or offsets healthcare costs associated with, but not limited to, routine health examinations, specialist referral visits, inpatient and outpatient surgery, unforeseen eventualities such as illnesses or injuries, and prescription medication. Health insurance policies are categorized as privately paid for by an individual, publicly provided as a service through Social Security, or commercially arranged by a company as part of an employee benefit package.

Broader levels of health insurance coverage generally have higher premium costs. In many cases, the insured party is responsible for paying his/her healthcare provider an up-front, tax deductible amount called co-pay. Health insurance companies then may compensate healthcare providers directly or reimburse the policy holder based on the remaining portion of an itemized bill.

Why it Matters:

Health insurance primarily protects individuals from the prohibitively high costs of surgical procedures, inpatient hospital care, and emergency attention. Though health insurance itself can become costly for a family, it is only a small fraction of the potential costs associated with unforeseen illnesses and emergencies (for example, the diagnosis and treatment of cancer or a heart attack).

Related Terms View All
  • Zero Capital Gains Rate
    For example, downtown ABCTown has decayed over the last 10 years. There are many vacant...
  • Take a Bath
    John Doe buys Company XYZ shares at $10. Two weeks later, the stock tanks to $2 a share....
  • Qualified Appraiser
    A qualified appraisal is a document that formally describes the value of a piece of...
  • Wallflower
    Usually used to describe individuals who are relegated to the sidelines in social events...
  • Telephone Booth
    When an investor wishes to buy or sell a security listed on the NYSE, she "places a trade...