Health insurance is a legal contract in which a health insurance company agrees to provide certain medical coverages in exchange for a set monthly premium. Usually, this contract is in effect for a year and is then renewed annually. The premium can fluctuate depending on the health status of the individual insured. While many people believe that health insurance costs are outrageous, the benefits far outweigh having to pay for medical procedures and treatments out of pocket. Expensive health insurance rates can certainly make people shy away from purchasing a plan, so it is important to know why these costs have become so expensive over the past years.

One of the main reasons for such expensive health insurance rates is because the cost of medical procedures has also increased. As a result, insurance companies must raise premiums in order to cover their costs and overhead expenses. This is, unfortunately, passed on to the consumer.

Another, more alarming reason for increasing health insurance costs is because many people choose not to purchase a plan until they require medical assistance. In general, to receive the lowest premiums, a person should purchase a health insurance policy when they are young and in good health. If they neglect to secure a policy until they have developed a serious disease or chronic health condition, then they will be paying higher premiums. This is because insurance companies determine premiums based on the amount of risk an individual poses. Someone who already has a medical condition is likely to seek medical treatment compared with a healthy person who may not need to visit a doctor or hospital for several years. As well, a person who has no health insurance will think twice before visiting a medical facility, because they would have to pay for these costs out of pocket. With a health insurance policy in place, a majority of the cost is absorbed by the health insurance company so they are more likely to overuse medical services, even for the smallest health issue.

Health insurance is an important investment for every individual and family and although the premiums may seem to be high, it is a necessary cost to keep everyone healthy. If more people obtained a policy when they were young and in good health, their premiums would be significantly lower. This same would apply if people visited the doctor or used medical services only when warranted. By abusing the system and using a health insurance policy for other reasons that what it is intended for, premiums can be kept lower. The benefits of a health insurance policy are far more beneficial than having to pay for these services out of pocket.