What is the concept of "self-insurance"?

The concept of "self-insurance" refers to a strategy where individuals or entities set aside funds to cover potential health care expenses rather than relying on traditional insurance. This method allows individuals to manage their own risk by accumulating savings that can be used to pay for medical costs when they arise.

Self-insurance is often utilized by those who are confident in their ability to estimate and save for potential health care needs. It provides individuals with greater control over their finances, as they can decide how much to set aside and when to utilize those funds. In this approach, there's an emphasis on financial planning and personal responsibility rather than transferring the risk entirely to an insurance provider.

Additionally, this method can potentially save money in the long run, as it avoids recurring insurance premiums, although it does require discipline and foresight regarding healthcare expenses.

While other options may mention aspects of insurance or financial arrangements, they do not capture the essence of self-insurance as effectively as the correct choice does.