How to Shop for Your Individual Health Insurance Policy

Not everyone has access to employer-sponsored insurance. While business supported health insurance companies garner the efficiencies of scale, providing more benefits with lower premiums simply because of the number of people enrolled, Individual health insurance policies can be an effective way to protect yourself in the case of injury, illness, or disability. Going without health insurance in these days of increasingly high medical costs can cost you everything you own.

Shopping for an individual health insurance policy can be confusing and more than a little intimidating. By knowing what to look for, what to avoid, and what questions to ask, you can provide yourself with more than adequate coverage, even if you are self-employed, a new employee, or simply seeking more coverage than is provided by your place of employment.

Understanding Insurance Jargon And Terminology

States vary in their requirements and rules, but understanding the basic terms involved with individual health insurance will help you be a more effective insurance shopper and a more discriminating individual health insurance buyer. Your current health status may or may not be grounds for denial of future insurance. This is called "guaranteed issue." "Guaranteed renewability" refers to the health insurance company's right, or lack thereof, to cancel your coverage if you become ill in the same way the auto insurance companies cancel coverage for people who have been involved in too many accidents. Ideally, you should try to get a "noncancellable, guaranteed renewable" individual health policy. Second best is a "conditionally renewable" policy that only allows an insurance company to cancel all policies within a specified category, but not yours alone.

Depending upon your state of residence, health insurance companies can resort to "limits on pre-existing conditions exclusions," which may disallow coverage for medical conditions that were in effect prior to your initial coverage. "Portability" refers to whether or not you get credit for prior coverage or if you must wait until completing the standard exclusion period. You will also want to look for a health insurance company that offers a rescission period during which time you can evaluate the policy. Normally, rescission periods are 10 days in length. If at the end of this examination period you decide you do not want the coverage, you can cancel your individual health insurance policy and receive your full premium back.

Insurance Information Sources

The Internet is an excellent medium for health insurance shopping and the comparison of health insurance companies. Since the laws of each state vary, you will need to become knowledgeable about your state's laws. Georgetown University offers an interactive site with information about each state, the terms, coverage limitations, and premium policies specific to your state. Another online resource is the National Association of Health Underwriters. Their website can help you find the best independent health insurance agent in your state for your insurance needs.

The most important thing to keep in mind when shopping for individual health insurance is to make sure that you understand exactly what is covered, when coverage begins and what is not covered. If there are any aspects of your policy that you do not completely understand, it is up to you to contact your individual health insurance agent and make sure you understand everything.