Kids and Health Care: How Health Insurance Works Conclusion

This chapter has discussed traditional indemnity health insurance -- and its several variations -- in detail. It's also explained how this kind of health coverage works for children and families.

To sum up, indemnity insurance is not usually the most cost-effective form of health coverage. And its higher costs often increase geometrically for a larger family. In addition to having higher monthly premiums than managed care plans, indemnity insurance requires a variety of out-of-pocket expenses of people covered. The combination of these factors means that a family with two or three children may need $3,000 to $5,000 a month in cash on hand to cover medical costs.

This is a steep price to pay for indemnity insurance's undeniable pluses -- flexibility and broad acceptance.

If you manage the insurance carefully and insist on stop-loss provisions and other expense caps, the costs can be controlled. But this will require a hard focus on your part, every time the policy comes up for renewal.