Individual health insurance is medically under written. This means the company gathers the health information on the proposed insured. The information is obtained from the answers to questions on the application, and doctor and hospital records. After the underwriter has reviewed the information, a decision is made on how the policy will be offered to the insured. It may be offered as applied. In that case it is usually issued and made effective.

If any changes are to be made the insured will be notified of the proposed changes. If the person does not want to accept the policy with those conditions, the policy would not go into effect. Any moneys sent with the application would be returned. No moneys can be charged or any fees kept. The refund would come directly from the insurance company to the person.

Understanding terms such as a "Basic Medical", "Hospital/Surgical" or “Indemnity Insurance” is very helpful. In general, a "Major Medical" or "Comprehensive Major Medical" health plan covers medically necessary treatment unless specifically excluded in the policy. On the other hand, a "Basic Medical", "Hospital/Surgical", or “Indemnity Insurance” typically covers only treatment that is specifically included in the policy. Look carefully at the difference. "Basic Medical" plans serve a purpose. However, some are designed to look like a "Major Medical" plan and are aggressively marketed. If you qualify and you want the most comprehensive protection, look for the phrase "Major Medical" or "Comprehensive Major Medical" on the offering brochure or policy.

A list of plan exclusions should be clearly stated in the sales brochure - almost always at the very end. Many exclusions are typical (i.e. acts of war, self-inflicted injuries, custodial care, etc.), while others are not and should be carefully considered when comparing plans. For example, does the plan have a waiting period for certain conditions? Also, watch for the typical exclusion of a "Basic Medical" plan - "anything not specifically listed in the policy".

After you pay the deductible, major medical insurance normally pays a portion of the covered charges (i.e. 80%) and you pay the other portion, known as "co-insurance", until your out-of-pocket expense equals the policy stop-loss-limit. Once you've paid your limit, the policy then pays 100% of the covered charges up to the policy maximum. Be sure you're protected with a stop-loss-limit. In a PPO, you should check for a stop-loss-limit on both "in-network" and "out-of-network" charges.

No matter whether it's an insurance company employee, or an independent agent who completes your insurance application, your monthly premium is exactly the same. Since health insurance can be complicated and expensive, find the best independent agent you can to help you get the most for your money.