ARM’s Guide to Health Insurance

What is Health Insurance?

Since ancient times, people have pooled together their resources to help look after their families in times when the main provider would become ill or die, leaving the rest of the family vulnerable.

Each family paid into a collective pot which any family could draw on in times of ill-health or death. In this sense, Health Insurance is one of the oldest and most basic forms of financial planning.

In many countries where there is a public health service, many individuals or employees still choose to pay into private health insurance schemes in order to be treated quickly, at a time that suits them.

Health Insurance can cover medical care including dental care; critical illnesses which stop people from working; disability through illness or injury and long-term nursing care (usually for the elderly).

What are its benefits?

  • Health Insurance can help you pay for regular, preventative health checks which aid in detecting potential illnesses early before they develop. Prevention is not only better than cure, it’s cheaper and prolongs your life.
  • Health Insurance can reduce the cost of getting treatment and speed up the process of being diagnosed and receiving treatment.
  • It also spreads the cost of medical treatment by the payment of regular premiums rather than a sudden and possibly unaffordable sum of money.

What different types of Health Insurance are available?

There are government-sponsored social insurance programmes and private insurance schemes. In addition, policies can be taken out by individuals or by companies on behalf of their employees.

There are two major types of policy:

  1. The Fee-for-Service: patients see a doctor of their choice and the fee for each service provided by that doctor is paid for by the scheme.
  2. The Managed Care Plans: you don’t just use a doctor of your choice but a selected network of health care providers.

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The different types of Managed Care Plans are:

  • Preferred Provider Organisations, otherwise known as PPOs. The PPOs have contracts with a network of hospitals, doctors and health care providers. They deliver services for agreed fees, usually offered at a discount because of the negotiating clout of the PPO.
    As a customer of a PPO, you have to choose the primary health provider from an approved list. However, this type of scheme does offer some flexibility because you can still choose from outside the list but you then have to pay a larger proportion of the bill yourself.
  • Health Maintenance Organisations or HMOs, are schemes into which you pay a periodic premium, usually monthly. In exchange, the HMO provides healthcare including hospital visits, emergency care and operations, through its own group practice or other providers under contract. However, they will not allow you to choose outside of these providers apart from exceptional circumstances.
  • The third type of plan is called Point-of-Service or POS plans. These are indemnity type policies offering you security in case of injury or illness. The primary care doctors or hospitals usually make referrals to other providers who are covered by the plan. If they refer you outside this network then the plan will pay for all or most of the costs. If you insist on another hospital or doctor yourself, for a medical service specified in the plan, the insurance will pay part of the costs.
    In Nigeria, HMO schemes are the most popular medical care.

Is it relevant for me?

Health is basic to human happiness and therefore Health Insurance is, strictly speaking, relevant to everyone.

However, it is particularly relevant for anyone who is the principal breadwinner in their household, with a lot of dependants such as a spouse, children or ageing parents.

It also relevant to anyone over the age of 40 or 50 when ill health is more likely to occur, and for anyone who has a history of family illnesses, who smokes or who is overweight.

What tips can ARM provide?

  • Monitor your health and the health of your family members carefully on a regular basis and exercise regularly.
  • Think about how many people depend on you and assess the risks to your health.
  • Remember that prevention is better than cure and that advances in medicine have increased life expectancy dramatically in the last 50 years.
  • Do some simple diagnostic health checks such as calculating your Body Mass Index (BMI) and taking your own blood pressure.
  • Subscribe to an HMO in Nigeria and an International Health Insurance programme to cover complex medical treatments and evacuation.

How do I start?

Please talk to your ARM Wealth Advisor or a Health Insurance company.

Last Update: June 20, 2017  

September 21, 2016   313    Insurance  
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