Cancellation of a Health Insurance Policy: The Do's and Don'ts

When cash flow is short, people look for things they can do without. If you are in good health but are suddenly short of cash, you may think that you can take a chance on going without health insurance. That is a risky proposition, but is a decision that only you can make. This discussion should help you understand your options.

The Obvious Drawback to Canceling

The most obvious drawback to canceling your insurance is that when you become sick, you will have to pay for coverage out of your own pocket. Notice the wording—that's "when," not "if." The American approach to health care is primarily a "treat symptoms of disease or illness," approach, not a preventative or real curative approach. Consequently, everything about our lifestyles—from our food sources to our working and home environments—is structured to ensure that sooner or later we will be sick. And if you have no insurance coverage, the only places that actually have to take you in are the free clinics, that is, unless your condition is life threatening. Even then, a hospital is obligated only to stabilize you at which point you can be sent home. For that matter, even the free clinics may charge a fee if they ascertain that you have some income and can pay all or a portion of the fee.

The less Obvious

Even if you are convinced that you are in such perfect health that you will probably not get sick, you cannot control all aspects of the world around you. You can't prevent every accident (not referring to auto accidents) or fully protect yourself from everyone around you. Furthermore, you could think you are in excellent health and suddenly find out otherwise; there are scores of examples of people who hadn't been to a doctor in years and suddenly had a stroke or were discovered to have some sort of cancer that had never given them the slightest symptom that would have cause suspicion.

Dos and Don'ts of Dropping your Insurance

If you are willing to face the risk of living without health insurance, there are still some options which could make life easier if the unexpected does happen.

DO:

• Consider taking out an inexpensive accident and dismemberment indemnity plan. Many of these are offered by your local bank or credit union and are very inexpensive;
• Ask for a complete physical, including blood work and a stress test before dropping your insurance;
• Put part of the money you would have spent on premiums in a safe investment plan such as CDs, fixed annuities, or low risk securities such as bonds or well established mutual funds;
• Take a pro-active attitude toward maintaining your good health. This should include exercise, a healthy diet that avoids chemical additives and trans fats, but includes supplementation with a high quality combination of nutrients and vitamins.
• Consider low cost plans with organizations such as fraternities and other groups that have programs for helping people pay for catastrophic care. These are not considered insurance, but will pay the bill if you should have a hospital event.

DON'T:

• Ignore the many contaminants to which our society is exposed; if you hope to live a long life without eventual need for a doctor or hospital, the first step is to closely examine your diet;
• Cancel your current coverage without checking for other alternatives that may lower your premium while still providing at least catastrophic coverage;
• Assume that just because you are in good health now, you will never have a need for a physician.