Health insurance isn’t really insurance

At least not in Canada. It’s a benefit instead.

In its basic definition, insurance is intended to cover catastrophic, financial loss. To be worth insuring a loss should be both catastrophic and financial. For example, if your home burns down, it’s very unlikely you’ll have the money to rebuild it or to replace all your belongings. In that case, insurance is needed.

Health matters are more of a grey area.

Provincial health plans

Canada is blessed with a semi-universal healthcare system. The coverage is pretty broad and wide, not to mention free of charge for individuals. Visits to doctors and specialists, pregnancy/birth, cancer treatments, major and minor surgeries, hospitalizations are all covered by the provincial governments.

Medication administered and prescribed by a hospital is also covered.

Based on this alone, most people don’t need extended health insurance.

Wait a second, you might be thinking. What about dental and vision care? What about medication prescribed by my family doctor? These aren’t covered by provincial plans.

You would be right. However, it doesn’t automatically mean you should purchase extended health insurance.

With private insurance, come premiums, deductibles and caps

All insurers will charge you premiums when insuring you. The majority of them will also require a medical questionnaire before even deciding to insure you. If you have a pre-existing condition, it may be excluded, or you may have to pay a supplement for it to be covered.

All policies have limits and deductibles. For example, reimbursements are usually in the 70%-80% range. You’ll always have to pay for a portion of your medical claims.

Claims also have a yearly limit. You may only be covered for up to $ 1 000.00 in dental care.

In order to determine if extended health insurance is right for you, you need to assess your yearly healthcare expenses. Then offset said expenses against the premiums and deductibles, and the reimbursements you would receive.

Most people -including myself- are usually shocked to see the premiums and deductibles they pay exceed their expenses and reimbursements.

As I’ve mentioned before, insurance companies are not charities. Their goal is to minimize risk and maximize profits. Health insurance offers them a great opportunity to do so.

Self-insure instead

If your employer doesn’t offer extended health coverage, or doesn’t pay 100 % of the premiums, consider self-insuring instead.

Most care needs aren’t critical or catastrophic. Dental clean-ups and cavity removals are pretty common. Same for eye exams or massage therapy.

They can be budgeted and planned for.

Personally, I am lucky to be pretty healthy. I haven’t had the need to use the healthcare system to a great extent so far. My yearly health expenses are between $ 1 500 to $ 2 000. This is an amount I can cover myself.

Your risk tolerance may be different but it is something I recommend you at least look at, before buying extended health insurance you may not need.

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