Your health insurance coverage has a direct relationship to your overall health and well-being. If you do not have health insurance of any kind, you may be at risk of not receiving the medical services that you need to stay healthy or recover from an illness or injury. If you have health insurance, but the coverage is limited, you may not receive certain services when you need them. However, your health insurance coverage relates to your finances, as well. Comprehensive health insurance may cost you a lot in monthly insurance premiums, but it also protects you against the potential for huge medical bills. Understanding the different types of health insurance, therefore, is critical to promoting your good health and conserving your finances.

Health insurance essentially breaks down into two categories, indemnity plans and network plans. Typically, an indemnity plan will reimburse a percentage of medical expenses, such as 50 or 80 percent, leaving you with the responsibility to pay the remainder. Most indemnity plans also require that you pay a yearly deductible, or an out-of-pocket amount for services before the insurance company will begin to pay benefits under the plan. Deductibles are usually in the range of several hundred dollars per insured person. Indemnity plans also require the filing of claims, although most doctors will do this on behalf of their patients. Finally, an indemnity plan typically allows an insured person to choose his or her own attending physicians.

The other category of health insurance is a network plan. A network plan encourages you, and may even require you, to use doctors and hospitals on a designated list. Most network plans also insist that you choose a primary care physician, who will serve as the gatekeeper to the medical services provided by specialists and hospitals. Network plans do not typically reimburse after a service has been rendered. Rather, these plans pay a standard monthly fee to their network doctors to cover all the services necessary for the plan's insured persons. This, in theory, makes the doctors and service providers more cautious about prescribing costly medical treatments when they are not absolutely necessary. Because the payment model of network plans is based on an upfront fee paid to doctors, there are usually no claims to be filed under these types of health insurance. In order to keep insurance premiums reasonable for a network plan, you may be required to pay a minimal copayment, usually in the range of $20 to $35, at the time that a service is rendered.

Both indemnity and network plans may exclude certain types of services from coverage and may limit coverage for pre-existing conditions. Your plan's terms can be critical to managing your overall health.