The Link Between Risk Management and Health Insurance

In today’s world, we are faced with many uncertainties and possibilities in our lives. While we often anticipate the best outcome, there are times where certain unfortunate incidents can and may possibly occur. While most of these series of events are beyond anyone’s control, what we can do is undertake the relevant risk management activities.

What has risk management got to do with selecting the right type of health insurance plan? In essence, it’s everything. Those in the business of risk management will inform you that RM generally involves a cyclical process. It essentially comprises the phases of risk identification, risk assessment, risk analysis, risk mitigation, risk review, followed by a return to the first phase. By purchasing a health insurance policy, you are actually undertaking the process of risk mitigation. To be fair, the risks that you face in your daily life will not be fully eliminated. However, the amount of risk faced can be effectively transferred to a third party.

This third party is in essence, the health insurance firm offering you a myriad of complicated but yet enticing range of risk management products. Get the picture?

By understanding the above process, we can now move on to the available types of health insurance plans. Again, depending on which part of the world you come from, these products maybe named differently for the following reasons: cultural affinity, as well as being in compliance with local state regulations. In some countries, errant insurance firms as well as individual agents have been brought to task for mis-selling their product to potential clients, all for the sake of boosting their own sales and commissions.

The commonly available insurance plans often stem from the basic whole life policies. This generally should encompass coverage in the event of death, total as well as permanent disability. Along with it, a ‘rider’ plan can be added. And very often, this involves a ‘health rider’ plan with various coverage options (and obviously varying premiums depending on various personal human factors). Now, it should be noted that such rider plans should only cost a mere fraction of your whole life policy and yet, providing near equivalent monetary coverage in an unfortunate event.

What about a full policy dedicated to the so called ‘health insurance plan’? This involves finding out more from your local insurance agency. But in summary, it shouldn’t deviate much from a basic whole life policy, with the exception of more specific coverage for health related occurrences. In some countries, such policies are provided for all employees assigned to work in certain industries as part of state regulation. However, this may not be the case for many other countries.