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Health Insurance Explained: A Complete Beginner’s Guide to How Health Insurance Works Medical treatment can be expensive, and even a single unexpected hospitalization can put significant pressure on a household budget. Health insurance is designed to reduce the financial impact of covered medical expenses by transferring part of the financial risk from the individual to an insurance company. However, buying health insurance is not simply about choosing the policy with the lowest premium. A policy can have exclusions, waiting periods, deductibles, co-payments, limits, network restrictions, and other conditions that affect how much you actually pay when you need medical care. For beginners, the terminology can also be confusing. Terms such as premium, sum insured, deductible, co-payment, coinsurance, waiting period, pre-existing disease, cashless treatment, exclusions, network hospital , and claim all have different meanings. This guide explains health insurance from the ground ...