To position yourself better for cheaper rates, you need to understand how insurers compute your rate. By understanding their thinking processes, you’ll know how to make adjustments that will help you get superior coverage for much less…
Insurance is all about managing other people’s risk profitably. The point is that in providing coverage or managing other people’s risk, the must NOT put themselves at risk. And since they’re basically a business, they ensure that all the services they render leaves enough room for sizeable profits to them. The question now is: How do they successfully classify profiles into risk levels and so stay profitable after providing the promised coverage?
They use the very same factors that are either indicators of, or pointers to, poor health or a higher likelihood of early death. They consider your use of tobacco, your cholesterol level, your Body Mass Index (A fancy phrase for saying whether you’re overweight or not and how hazardous your lifestyle is generally. They also check if you’re diabetic (and if you’re taking your medication), your family health history, your claims history and a few other things.
If you check each of the factors listed above, you’ll agree with me that they can help determine how healthy a person is today and the likelihood of illness in the near future.
Insurers go ahead to group the general population into categories. You’ll hear stuff like “uninsurable” or “standard”. All these labels are a factor of how much they think it might cost them to insure you. However, it goes even further…
Different people will check differently to a list of all the indicators used to measure a prospect (some are listed earlier in this article). To ensure they don’t price a low risk too high and so lose them to competition or price a high risk too low and so lose money, they do more detailed computing.
Each insurer gives a certain weighting to each of the various factors. Two major things determine relevancy scores or weightings given to each factor. They are each insurer’s experience and their expertise. This difference is scoring leads to a big difference in risks associated with different profiles. This eventual makes their end results even more different bearing in mind that there are a good number of factors considered in the computation.
So how does this affect you?…
If you want affordable health insurance and there are hundreds of insurance carriers to pick from, how do you know for sure who’d have cheapest rate (Or more correctly, plan)?
Important NOTE: By law, insurers cannot offer different rates for the exact same health plan. Nevertheless, to ensure they have the correct rates for different risk profiles (and by so doing remain competitive and profitable) they instead have packaged very many different plans to cater for specific profiles. Presently the US has above 10,000 such plans for you to pick from. Sounds like the same thing as giving different rates for, say, 10 plans if you ask me — Only more confusing ).
You’d have to obtain a good number of quotes, compare plans and then pay for whichever offers the best price/value.
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Tags: health, health insurance, insurance