No one is immune to grumbling about insurance rates, whether they are for homeowner, life, or health. Everyone wants the best, but not for too much. If we have the option to shop around, we should. We want the best price for the coverage that we need. It is important to only choose stable and reliable insurance companies. You get what you pay. This is not just about the coverage you have, but also the quality of the claims service. And that they will still be around when you need them.
What other factors affect the premium for the policy we are purchasing? It is hard to pin down specifics when it comes to health insurance. For at least one year, the changing and possibly stagnating face of health insurance today will be a confusing mess. Before Obamacare, you had the option of addressing your age, gender, pre-existing conditions and health history, as well as your profession. You are either applying for coverage individually or through an employer. You are automatically enrolled in the employer pool. Depending on your employer’s size, you may also be attached to a larger pool. The pool is one that takes on risk. It should be as similar as possible. The pool is more beneficial for younger, healthier members than it is for those who are not as healthy. This may be reflected in lower premiums to both the employer and employees. If you are an individual, your chances of being placed in a pool with like-minded people are higher. If you are not covered, your pre-existing conditions could cause total coverage rejection.
Life insurance? This is closely linked to the actuarial tables that relate to age, health, and profession. Your profession is more likely to be considered “premature” if it is risky. A life insurance policy purchased by a professional skydiver at 25 years old would have a greater chance of being reclaimed sooner than one bought by a school teacher at 25 years old. The policy will also be more costly if you are older than the person who purchased it. They want to be long-lasting.
There are many actuarial tables which cover all types of risks, such as age, sex and profession. They also include information about life expectancy and accident probability. These tables are used by insurance companies of all kinds to insure their policyholders against insolvency. They also help them collect sufficient premium to cover all the risks they insure.
These are some general points that companies might look at, but they are not set in stone! These are the following:
The type of car you choose for your auto is an important consideration. A flashy and fast vehicle will cost more than a family sedan. The cost of the vehicle is clearly a factor. A single male under 25 may be at greater risk than a married man of the same age. Why? Statistics show that the married man is statistically more responsible. Unfortunately, not all people fit the criteria. However, the average is better. You might be at higher risk if you work in restaurants, particularly a late-night establishment. For all these reasons, police officers have a higher rate of arrest than other professions.
People who bought Harley-Davidson motorcycles used to get better rates than those who purchased sleeker, faster bikes. Reason? Reason? Harleys can be expensive so owners view their bikes as both an investment and as motorcyclists for more “purist” reasons…not just to burn asphalt. This means that more responsibility equals lower risk.
You will not receive the same rate if your home is far from a fire station or water source to fight fires, unless you are looking for homeowners insurance.
It is important to remember that none of this information is discriminatory. Instead, it is intended to determine the cost of the risk an insurance company takes to insure your property or you. The actuarial tables provide companies with an assessment of risk that allows them to determine the appropriate premium for the risk. Good insurance companies are responsible for their financial health and comply with all state insurance regulations.
It is what it IS, regardless of whether you like it or not. Without knowing the risks and setting the right price, no one will blindly agree to financial indemnification for anyone.
Finley Keller has been in the insurance business for nearly 30 years. She started as an agent licensed with a CLU and then moved into claims. Auto, homeowner, worker’s compensation and other policy types that are liability-only. Material and casualty.
The last ten years of her life were spent working in SIU (Special Investigative Unit), which specializes in fraud detection. She was the manager of SIU for four years, and was responsible for fraud cases and training employees to comply with state regulations. She is a former member of NCFIA (Northern California Fraud Investigators Association). Through the American Educational Institute, Inc., she is a Senior Claims Law Associate.