It’s easy to understand the importance of protecting yourself and your family. You wear seatbelts because you understand how they can help keep you safe in case of a car crash. You have medical checkups because you know an early warning can help you with a health problem. Supplemental health insurance is another kind of protection. But what is it? And how does it work? Let’s find out.  

What is supplemental health insurance? 

Supplemental health insurance does what is says in its name. It “supplements” – adds to – provincial health insurance. It’s often referred to as personal health insurance.  

You can get supplemental health insurance through an employer, from an advisor or online. It’s another way to help protect yourself and your family. In this case, it helps protect you from a threat to your financial security from an illness or accident.  

But protection from supplemental health insurance isn’t as easy to figure out as a medical checkup. Understanding how it works can help you decide whether to buy coverage. Here are answers to some common questions. 

How does supplemental health insurance work? 

Supplemental health insurance works by pooling or spreading financial risk. A large number of people – the policyholders – pay into a shared pool of money. If a policyholder runs into a large, unexpected medical expense, the pooled money can help pay for it. The pooled money can also cover smaller, more routine costs. 

Why does supplemental health insurance cover some things and not others? 

Insurance companies need to set their prices (called “premiums”) properly and keep them affordable. To do this, companies have to be clear and specific about:  

  • what they do cover (benefits) and  
  • what they don’t (exclusions).  

The fewer the exclusions, the more the insurance costs. Without exclusions, the cost would be more than most people could afford. 

Why do you sometimes pay more for supplemental health insurance in a year than you get back in benefits? 

“This gets back to the pooling principle,” says Moshe Milevsky, Associate Professor of Finance at the Schulich School of Business. “In any given year, some people are actually getting more in claims payments than they pay in premiums. Others might be getting less. While this might not seem fair today, you never know when the tables may turn. The situation might be reversed next year.” 

What happens if your insurance company denies your claim? 

If your insurer turns down your claim and you disagree, you have options. You can take your complaint higher up within the organization. If you’re still not happy, you can go to an external panel. It’s a highly regulated industry. Even in the rare case that an insurer makes a mistake, there’s an appeal process in place. 

If you’re considering an optional medical procedure, find out ahead of time whether your insurance will cover it. That way, you won’t get any surprises after the fact. 

Major insurers process millions of claims each year, and deny a very small percentage. 

Is supplemental health insurance right for you?  

Not sure if supplemental health insurance is right for you? A Sun Life Financial advisor can help. An advisor can give you more information about personal health insurance. And, they can help you figure out if it fits your financial situation best.  

This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.