Criteria for Covering Illness Insurance and Medical Insurance Practice: From Endogenous Condition Restrictions to Compensatory Payment Characteristics

Section Two: Critical Illness Insurance I. Concept of Critical Illness Insurance Critical illness insurance refers to insurance that pays out benefits upon the occurrence of a disease specified in the insurance contract, such as critical illness insurance and special disease insurance. It means that when the insured is diagnosed with a disease specified in the contract, a fixed amount of insurance benefits is paid out according to the insured's premium to compensate for the losses incurred. Critical illness insurance does not consider the insured's actual medical expenses, but pays out benefits based on the insured amount stipulated in the insurance contract.

II. Coverage of Critical Illness Insurance (I) Underwriting Conditions for Critical Illness Insurance For business reasons, insurers generally restrict the insurable diseases. To qualify as an insurable disease, the following three conditions must typically be met: 1. Diseases Caused Internally Critical illness insurance must be caused by something within the body, meaning it's due to lesions in one or more organs, tissues, or even systems leading to functional abnormalities and various pathological manifestations. Those diseases clearly caused by external, severe factors should be considered injuries rather than diseases. However, many diseases are caused by external factors, such as bacterial infections, climate change, or environmental pollution. Theoretically, even if they originate from external factors, they must undergo a period of internal development, triggering various physical and chemical reactions within the body before manifesting as a disease. This differs from injury. 2. Non-Congenital Diseases According to basic insurance principles, all congenital physical defects, such as blindness, deafness, abnormal organ positions, or organ dysfunction, are not covered by critical illness insurance. For diseases caused by congenital or hereditary factors, such as congenital heart disease and hereditary schizophrenia, health insurance regulations vary from country to country. Most countries classify these as social insurance. 3. Accidental Illnesses: The limitation on accidental illnesses stems from the assumption that health is the norm and illness is the exception. By including accidental illnesses in health insurance, the insurance excludes certain health risks such as death or frailty due to old age. Health insurers typically do not accept policyholders who are bedridden and rely on various medications to sustain life. Furthermore, the accidental aspect not only means that it is uncertain whether the insured will develop a certain disease, but also that the specific disease they develop is unpredictable.

(II) Risks Not Covered by Critical Illness Insurance Critical illness insurance policies typically list "Exclusions" after "Insurance Liability," such as: "The following diseases suffered by the insured due to the following reasons are not covered by insurance: ① Suicide or criminal acts of the insured; ② Intentional deception by the insured or their beneficiaries; ③ War or military action; ④ Congenital diseases and their surgeries; ⑤ Diseases or surgeries caused by accidental injury; ⑥ Diseases or surgeries occurring during the observation period; ⑦ Diseases not listed in the insurance coverage."

Section 3 Medical Insurance I. Concept of Medical Insurance (I) Basic Concept of Medical Insurance Medical insurance, also known as medical expense insurance, is a crucial component of health insurance. It covers medical expenses incurred by the insured due to illness or childbirth, including doctor's fees, surgery fees, medication costs, consultation fees, nursing fees, various examination fees, hospitalization fees, and miscellaneous hospital charges. (II) Characteristics of Medical Insurance 1. High frequency of claims and high premiums Disease is one of the most frequent risks affecting humanity. Almost everyone needs medical services annually due to illness, resulting in a high claim rate and high loss rate for medical insurance. Furthermore, the technical nature of medical insurance means its total cost is higher than other personal insurance policies, leading to higher premiums. 2. Unstable and unpredictable payouts Although insurance companies can make general predictions about the incidence rate of a population in a specific region or period based on historical statistics, human health is affected by many factors, many of which are uncertain. Additionally, improvements in medical conditions and the rapid development of medical technology make it difficult to determine the reasonableness of total medical expenses. 3. Difficulty in Determining Insurance Premiums and Large Errors: First, more factors determine medical insurance premiums than life insurance and other types of insurance, and these factors are difficult to measure reliably and stably. Second, like other types of insurance, factors such as policy lapse rates and claims principles affect premium levels. Third, premium determination is highly dependent on conditions such as hospital management, medical equipment, and economic development; many changes in these aspects can significantly impact the insurer's predictions of future payouts. 4. Compensatory Nature of Medical Insurance: In medical insurance, the actual medical expenses suffered by the insured due to illness can be measured in monetary terms, thus medical insurance has a compensatory nature. Because these products require original medical expense receipts for claims, they are suitable for individuals without social medical insurance or other expense-based insurance.

III. Contents of Medical Insurance 1. Insurance Period and Liability Period The insurance period refers to the time during which the insurer assumes the responsibility of paying insurance benefits for losses caused by insured events stipulated in the insurance contract. The liability period refers to the time period from the date the insured becomes ill. If the insured's treatment exceeds the insurance period, the insurer is only responsible for medical expenses incurred within the liability period. The liability period is generally set at 90 days, 180 days, or 360 days, with 180 days being the most common. 2. Sum Insured Medical insurance generally stipulates a maximum sum insured, within which the insurer pays for the insured's medical expenses. In addition, it may stipulate the sum insured for each outpatient visit or the daily inpatient allowance. 3. Covered Items Generally, insurers will include the following expenses in the coverage: medication costs, surgery costs, diagnostic fees, specialist consultation fees, chemotherapy costs, blood transfusion and oxygen supply costs, and examination fees. Whether some expenses are covered depends on the specific provisions of the insurance policy. Furthermore, some expenses are excluded, such as the patient's meal expenses, tonic drug costs, and cosmetic surgery costs.