Learn how health insurance premiums are calculated so that you can be better prepared when you purchase health insurance.
If you live in a state that will use traditional underwriting to price your premiums, as opposed to community rating, you need to know what to expect in terms of insurance premiums and how those premiums are calculated. Ultimately, the insurance company determines the actual premiums and the exact price will vary from company to company based on a variety of factors, like the company's credit rating, financial stability and cash reserves that the company uses to hold down the cost of insurance.
Instructions
1. Obtain a health insurance quote from a health insurer. This will involve filling out an application for insurance. You must normally do this before you will receive a rate sheet or premium quote. The health insurance application will ask you a variety of questions about your personal life. You will need to provide the company with basic information such as your name, date of birth, and Social Security number. You will also need to provide the insurance company with detailed health information, including any medications you are taking.
2. Turn the paperwork in to the insurance company. The insurance company will process your application and make a determination on your premium rate using several criteria. Your age can affect your premiums because the older you are, the more risk you present to the insurance company. Old age comes with common age-related illnesses like arthritis, high blood pressure or other illnesses which may require medication. Your lifestyle can suggest to the insurance company whether or not you present a risk of frequent injury. The insurance company can use your sex to determine your risk of certain types of cancer. It might seem obvious for health insurance, but a health insurance company needs to know how healthy you are. Any family history of diseases, heart problems or blood disorders could affect your premiums. Any existing medications or pre-existing conditions could also affect your premiums.
3. Look on the rate sheet. The rate sheet, which is normally the last page of the health policy summary package you will receive from the insurance company, will outline the premiums you will pay for the policy you choose. The insurance company may price these premiums as "tiers." A tier refers to the level of service the insurance company will offer to you. For example, you may be charged one rate for individual coverage, and a different rate for family coverage.
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