A health insurance policy can provide just one or any combination of certain benefits:

- Hospital, medical and surgical expenses resulting from sickness or an accident

- Accidental death or dismemberment

- Disability resulting from accident or sickness (sometimes this can also be referred to as “loss of income” or “loss of time”

An accident is an injury that occurs accidentally.  A sickness is an illness or disease that is not the result of an accident.  Knowing the difference is important because policies may have different provisions that apply to accidents or sickness.  Also, there are some companies that sell a separate accident policy that does not include sickness.

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As we discussed above, health insurance is designed to protect again two types of economic loss.  Loss of income and expenses for medical care which places them in either of two broad policy categories:

- Disability income policies

- Medical expense policies

Disability income policies can also be referred to as loss of income, loss of time or replacement income.  This type of policy will pay benefits to an insured who is disabled and can no longer work to earn a regular income.  Payments can be weekly or monthly depending on the policy.

Medical expense policies are represented by a wide range of coverage from very minimal to comprehensive packages with multiple coverage.  Some include both accidents and illnesses, various hospital expenses and other costs pertaining to medical care such as:

- Accident and sickness policies

- Hospital policies

- Basic medical expense policies

- Major medical expense policies

- Comprehensive medical expense policies

Any of these policies might cover various combinations of the above and may be paid in a lump sum.

Accident Policies.  Some policies cover only accidents and not illness.   As you might imagine, policies like this are very specific about what is considered an accident. 

It is important to understand what is defined as an accident as it pertains to the health insurance industry. . .an accident is an event that is unforeseen and unintended.

Keep in mind that any discussion of this type of policy also applies to any type of policy that includes accidental coverage not just accident specific policies.

Accident benefits are most commonly paid for accidental loss of life (also called accidental death), accidental loss of limb or sigh (dismemberment), loss of time and/or income, hospital expenses, surgical expenses, and medical expenses like visits to the doctor.

Let’s expand a bit on dismemberment.  As we said, this would be loss of limb or sight, however, different states have statutes that define dismemberment and they can vary from state to state.  This is a subject that you need to discuss with your insurance agent to determine what actually constitutes dismemberment in your state.

Accidental Death Benefit can also be referred to as “principal sum.”  This type of coverage should not be confused with life insurance.  There is a world of difference between the two.  Life insurance policies will generally regardless of the cause of death.  An accidental benefit is paid ONLY if the death is accidental as opposed to a death by natural causes or illness.

The person who received the death benefit is called the beneficiary.  The policy owner has the right and responsibility of naming beneficiaries.  Usually there is a primary beneficiary however he/she can assign a second and even a third beneficiary.

The primary beneficiary is the first person in line to receive the benefit in the event of the death of the policy holder.  They can also name a second beneficiary who would receive the benefit in the event the primary beneficiary dies before the insured.  Some policies can include a third beneficiary who would be in line after the first two.