Insurance Companies & Rate Increases

Ahhh, the dreaded concern … will I have a rate increase and when.  Good question.

Speaking in General, of course, and mainly about health insurance companies, here is the scoop.

Most companies including Medicare Supplement and Major Medical generally have a 12 month rate guarantee.  They are not required to, but you will want to ask your agent before purchasing the policy and ask if the policy has a “rate guarantee”.  Now, if you go up in age during that year, your individual policy is subject to go up in premium, that is not included in the guarantee.  After the initial rate guarantee, if any, the companies can basically increase the rates at anytime they want.  Generally you will see them increase either quarterly (every 3 months), semi-annually (every 6 months), or annually (each year), or as needed.  It all depends on where you live, how the claims in that area are compared to the premiums received, and operating expenses.  Individual policies are NOT increased individually … I repeat, you are not singled out just because you had high claims one year.  Everyone either in your zip code, or in your “zone” or maybe in your state pays more.  You are treated as a whole … kind of like a big group, so to speak.

Speaking of Group medical, that is a little different because there are no guarantees.  It can be increased as soon as they start seeing high claim volume.  They will increase that particular group’s premiums only to compensate for the claims.  They can keep going up until they feel comfortable with the money that they have coming in versus the money that they have going out.

Supplemental carriers such as cancer, heart, critical illness, etc these type of policies have what is called guaranteed renewable; this means that the policy cannot be cancelled as long as you pay the premiums, and the premiums remain the same as when you purchase it, unless they raise the premiums for everyone with that same policy (and this does happen, but not very often – it just depends on the product and the actuaries who priced it).

Life insurance has a couple of different products, I won’t go into all of them, just the main ones.  Whole life stays the same price the whole of your life; so the younger you purchase the better off you are.  Term life increases at the end of the term to the age you are at that time.  Universal life is basically the combination of the two, there is a minimum that you must pay for the insurance, but you can pay more to go towards your cash value.

Please understand, I have used a lot of non-technical words to explain this … and please take into account the date of this post before using this as a source.  Healthcare is changing rapidly and this may be outdated before I even get it posted.  🙂  If you need updated information please email me or visit my website at www.allbrightbenefitsandconsulting.com I will always be happy to help you.