Page 297 - Ebook health insurance IC27

Sashi Publications

Significant
Premiums are principally derived from analyzing historical losses paid. Ideally, total
losses should be significant enough to be used in this calculation. Medical expenses
meet this criterion. Potential expenses associated with acute conditions involving high
bills of hospitalization can easily produce a considerable amount.

Accidental and Unintended
Under one definition of risk, the loss must be fortuitous, unintended and beyond the
insured person's control. This means that if an individual deliberately causes a loss, he or
she should not be indemnified for the loss. This is why drug addiction and hazardous
sports are excluded from almost all of the medical insurance plans.

Unexpected
The loss also must be unexpected. If a loss is so common as to be expected, it is
considered non-insurable. Examples of such non-insurable include vaccinations and
circumcisions which are excluded coverages from almost all of the medical insurance
plans.

Calculable
The risks should reasonably be calculable. The insurable event, though unexpected,
must permit a clear and definitive measurement of the value of the loss associated with
the occurrence. The actual loss per an individual is difficult to predict. However, an
estimate can be projected through the law of large numbers and the insurer person's
past experience.

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