Tuesday, November 18, 2008

Obtaining Individual/Family Health Insurance

Individual and family policies may be purchased directly from an insurance carrier or through an insurance agent licensed to do business in your state and appointed by insurance companies to represent them. A good place to start is an online search engine like www.ehealthinsurance.com or www.extendone.com, which provide quotes for thousands of policies from many different carriers.

TIP: Be careful when you shop online for health insurance, and watch the fine print. Most web sites offering “online quotes” request personal contact information and then don’t deliver any online quotes—they sell your information to third parties along with your express permission to phone you. A good online insurance web site will not ask for your name or contact information until you have seen quotes and are ready to choose a policy.
Insurance companies are legally required to charge the same premium whether you purchase your policy directly from the carrier or through a licensed health insurance agent. You should always get quotes from several carriers before choosing a policy, and choose an agent appointed by several of the major carriers in your state, particularly if a member of your family has a health issue.

As we know, employers offering employee health benefits and their insurance companies must blindly accept every applicant regardless of their health—which is why employer-sponsored group policies are so expensive. In contrast, in almost all states, individual/family insurance
carriers may choose the individuals whom they accept after analyzing the health risks of each family member applying for coverage. This process is called underwriting. The underwriter for an insurance company examines the healthcare experience, age, current health, family history, and lifestyle for each member of your family. The underwriter then makes three decisions
regarding your application:
  1. Acceptance. The underwriter may accept your entire family, or accept only certain members of your family, based on their assessment of the health risk of each individual.
  2. Uprating. If the underwriter decides that a member of your family poses a moderate health risk, the underwriter may accept your application with a typical 15 to 200 percent rate increase over the normal monthly premium for a healthy individual in your age group.
  3. Exclusions. The underwriter may accept your application with exclusions for “preexisting conditions” for one or more family members. For example, if you have a child with moderate diabetes, certain carriers will accept your child excluding all claims related to, or resulting from, diabetes. Such preexisting conditions may be excluded for a certain period of time or for as long as you keep renewing the policy.

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