What Is Health Insurance and How Does It Work?

Growing up, you will have heard a lot of people harp on and on about getting good health insurance and stressing about paying premiums. You must have realized that this was something very essential to life, that it was something most adults aspired to get, but what exactly is it? Even stranger still, how exactly does it work

That is something we will be tackling in detail in this article. We will tell you everything you need to know about health insurance – what it is, how it works, and how you can get private health insurance in the UK or elsewhere – so that you can take care of yourself and your loved ones. So, without any further delay, let’s get to it!

What Is Health Insurance?

Health insurance is a way for you to pay for the healthcare you need. When you have proper health insurance in place, it stops you from having to pay the full cost of your medical bills. Note that this isn’t free treatment. You have to pay a monthly premium, and based on this, your insurer agrees to pay part of the bills incurred by the sickness or injuries sustained by you or anyone else the policy covers.

How Does It Work?

Now that you know what it is, let us take a deeper look into how exactly it works. There are some terms you need to know and understand to fully appreciate the inner workings of a health insurance policy. Here’s what you need to know:

  1. First and foremost, there is the premium. You need to pay this fee, usually monthly, to the provider of your insurance. Consider this a fee for having the insurance. You risk losing your insurance if you don’t keep up with the payments.
  2. Know your deductible amount. This is the money you need to pay out of your own pockets before the insurance comes online for you. You have to pay a certain percentage of the costs before the insurance shares the rest.
  3. Once the insurance awakens and you start sharing costs, this is known as coinsurance. For example, you may have to pay 15% of the costs while your insurance covers the other 85%. Usually, your policy prominently displays the ratio of deductible and coinsurance for your reference.
  4. If you go for preventive care, which mostly includes annual check-ups, flu shots, vaccination for family members, and wellness screenings, etc., then the insurance should cover 100% of these. You will only need to pay a small fee to your doctor for a visit.
  5. Your insurance provider will be part of a network of clinics. If you go to these, you will save even more money. This is one of the many reasons why you will want to stay within this network provided by your insurance agent. You can learn which clinics fall under this umbrella by simply calling them and asking.
  6. There is a chance that your health insurance might even pay you back for doing certain things. For example, you might be able to win some discounts or earn some money for doing healthy activities. It is a reward for your behavior.

This is basically how your health insurance will work for you. However, everything is in fine print, so be sure to read each and every single sentence in the policy paper and ask for clarifications should confusions arise. But what do you look for in a health insurance policy? We tell you everything in the next section.

How to Choose the Right Health Insurance Policy

So, you now know what health insurance is and what makes it so essential. Now, allow us to tell you how to go about finding the right one using two simple steps:

Find the Right Marketplace

There are a lot of places where you can get health insurance. If your employer offers you one, then that’s one problem solved. If they don’t, you can get one directly from an insurer or a private exchange. You can also try checking your state’s marketplace or the federal marketplace online for health insurance. Needless to say, stick to the lowest premiums.

Compare What You See

You will find a lot of different kinds of policies, and the best way to judge which one is best is to compare the benefits each provides. Keep track of your family’s medical history and pick something that covers those most commonly seen ailments. You should also compare the clinics in the network, the deductible amount, and what exactly the plan covers.

Finding the right policy is all about studying the fine print. Take a microscope to that, and you should be good.


A health insurance policy is pretty much a must-have in this day and age, especially during pandemic times. Do the research, and you should be able to find a policy that covers all your needs.

Interesting Related Article: “What are Supplemental Health Insurance Plans?