**Abstract**

Health insurance is one of the instruments to achieve universal health coverage, which is not only the major goal for health reform in many countries but also the priority objective of World Health Organization. It provides financial security against healthcare costs and lessens the risk of incurring medical debt. There is an increasing understanding that poverty is exacerbated by ill health. Developing nations have recently increased the usage of various health insurance schemes to improve access to healthcare for low-income households to stop the negative downward circle of poverty and illness. These models help all countries regardless of income level can set out on the path to universal health coverage through a mix of different prepayment and risk-pooling mechanisms, tax-funding, and social health insurance. Right policies are necessary to achieve UHC. Concentrating on providing strong coverage for a clearly defined basket of services is well preferable to shallow coverage for every service with a high patient cost-sharing ratio. Health insurance system must be designed from the outset to be financially sustainable, which includes looking into ways to increase revenue sources and giving priority to the efficient use of resources.

**Keywords:** universal health coverage, health insurance system, healthcare financing, financial protection, out-of-pocket expenditure, access to healthcare
