Buying Individual Health Insurance Policies

Some people do not have health insurance coverage through their job because it is not offered by their employers or they are self-employed. These people have to get individual health insurance policies, which are harder to obtain, more expensive and less consumer friendly. The laws and regulations governing job-based coverage and individual policies are very different.

Generally speaking, individual policies do not offer as much benefits or protections as that of job-based coverage. This does vary based on the state where the individual health insurance policies were purchased.

Good health is not a guarantee even if you are healthy and currently do not spend much on healthcare. Just one hospitalization can set you back financially.

You can go to an agent to purchase an individual policy or look for health insurance coverage online. Independent insurance agents must be registered with your state department of insurance. So they will have a list of people licensed to sell health insurance in your state. Another way of locating an agent is by visiting the National Association of Health Underwriters website.

As the rules covering the two are different, consumers buying individual health insurance policies must be smart in their shopping and be aware of their rights and protections under the law.

Some things to look for under individual health insurance policies are:

1. Non-cancelable, guaranteed renewable coverage

This means that the policy cannot be canceled as long as you continue to pay the premiums and do not try to defraud the insurance company.

There are times when insurance companies cancel health insurance policies because the insured becomes sick, in much the same way that auto insurance companies cancel people who have too many accidents. Unfortunately, this is legal in many states.

So, look for a policy which is noncancelable and guaranteed to renew each year if you can. Failing which, the next best thing is to find a "conditionally renewable" policy, which means that the insurance company reserves the right to cancel all policies similar to yours, but cannot single you out for cancellation.

2. A 10-day rescession period

Most insurance companies will allow you 10 days to check the policy documents carefully and then decide whether or not you want this coverage.

You should be able to cancel the coverage and get your premium refunded if you decide you do not like the terms of the policy within the 10 days.

3. Clearly defined terms

Be clear on the following:

- What is covered 
- What is not covered 
- When the coverage begins

When looking at individual health insurance policies, you will find a wide level of coverage and more options are available to you. This is because there is no employer pre-selecting certain types of plans to choose from.