Health insurance today can be divided into two broad categories – traditional indemnity plans and managed care plans and, while both provide health insurance cover, they are very different in terms of both the cover that they provide and the manner in which they are administered.

Indemnity plans are designed to provide cover for unexpected medical bills arising mainly through accident or illness, whereas managed care plans are based upon the principle of supporting care that is designed prevent illness from developing in the first instant, or upon detecting and treating it at an early stage when treatment is often relatively simple and costs are low.

Indemnity plans are also designed to provide the policyholder with immediate care of his or her own choosing and place much of the responsibility for administration (the initial payment of bills and completion of claims paperwork) on the policyholder.

Because indemnity plans give the policyholder choice and access to immediate treatment and are designed to cover medical events that are often in themselves very expensive, the cost of indemnity insurance is generally high. Accordingly, indemnity insurance should only be purchased when you consider that it will best suit your own personal needs, based upon your medical history and current state of health, and when you are happy that you will be able to afford the policy, not only today but in the years to come.

Indemnity plans will normally be issued as basic health insurance, major medical insurance or comprehensive insurance, which is a combination of both basic and major medical insurance.

Basic medical insurance can normally be expected to cover such things as visits to the doctor (other than for routine check-ups and preventative care), hospital care (including room and board and some services such as x-ray and medication) and surgery performed either in hospital or at a surgical center or doctor's office.

Major medical insurance is designed to cover treatment for extended periods of high-cost illness or major injury and will normally cover all hospital costs, as well as subsequent out-patient bills.

In both cases this is of course nothing more than a general overview as cover will vary between insurance companies and indeed across different plans within the same company. It goes without saying of course that these three different plans will all have different costs with a basic insurance plan being the cheapest and a comprehensive plan the most expensive.