Which of the following is not an important factor when choosing an insurance company?

In recent years, owing to the rising cost of medical treatment, there has been a significant rise in the number of people buying a health insurance policy. People are going beyond individual policies and are buying policies for their family to ensure they have a financial cushion in case of an emergency. Health insurance not only covers you during your difficult times but also offers you tax benefits. 

While approving your insurance application, the insurance companies generally conduct a thorough assessment of your health profile. Based on their review, they fix the premium charges. 

Factors influencing health insurance premiums

Every insurance company has specific guidelines based on which they decide the premium cost. Here is a list of things that they consider while determining the medical insurance premium:

Age –

This one of the critical factors that affect the premium amount. Generally, the insurance companies follow the rule of thumb - higher the age, higher the premium. Older people are more at a higher risk of suffering from illness than youngsters. So, if it advisable to buy a health insurance premium when you are young; you will give comprehensive coverage and better benefits at an affordable premium. 

Past Medical History –

Your past medical records are crucial in deciding the premium amount. If you have a history of suffering from illnesses or have a pre-existing disease, then your premium will be higher. But if you have had no illness and have a relatively healthy life, then your premium will be lesser.

Occupation –

Your nature of work and the amount of risk that you’re exposed to at work affects the premium charges. Suppose you work in a school, your premium will be less, but if you work in an environment like a construction site or a factory where the risk of being injured is high, then the premium amount will be higher.

Policy Duration –

The tenure of your policy also plays an important role. If you choose a policy with a longer duration, the premium will be less. This may not be the same for a policy with a shorter duration

Body Mass Index (BMI):

Premium rates are raised if you the customer has a high BMI. People with high BMI are at risk of serious ailments including heart diseases, type 2 diabetes, breathing problems, high blood pressure and cancer.

Smoking Habits –

According to a report published in Lancet, a medical journal, India has about 11.2% of the total smokers in the world. Smoking increases health risks, and the insurance companies view smokers as high-risk insurance buyers, and therefore charge high premium.  People who smoke pay high premiums as compared to non-smokers.

Geographical location:

The location where you stay determines your policy premium cost. For certain geographic locations, the premium rates are high due to lack of healthy food options, climate and health issues.

The Type of Plan You Choose:

Premium payments vary depending on the type of health insurance cover you choose. A group health insurance policy has a lower premium as compared to an individual policy.. Also, if you have purchased add-on covers, your premium will increase.  Individual or group insurance has low premium rate, while family floater has high premium rate. Again, the policy terms differ from company to company.

BMI – Body Mass Index –

Generally, people with higher BMI are charged higher premium than those who have a normal BMI. This is because people with high BMI are at a high risk of suffering from various diseases like diabetes, and heart-related problems, and therefore need regular medical care.

Coinsurance Feature –

While purchasing a health insurance policy, if you opt for coinsurance, your premium will be less. In coinsurance, for any claim, you pay a specific portion of the claim, and the insurance company gives the rest. This step reduces the premium amount significantly.

After considering all these factors, the insurance company uses the health insurance calculator to decide the final amount of the premium. You can also use any online insurance premium calculator to calculate the estimated premium. 

When it comes to car insurance companies, drivers have their pick of options. There are hundreds of car insurance companies out there to choose from. Some of these companies are massive, with tens of thousands of agents that operate primarily out of a call center. Other companies are small independent agencies with only a handful of people working in a local office. Whether or not you decide to insure with a small insurance company or a large insurance company is typically a personal preference. Bankrate has broken down the pros and cons of each to help you find the insurer that’s perfect for you.

Small vs large insurance companies

Although there are no rules that define small and large insurance companies, small companies are usually the local offices you find in your community. Large insurance companies, on the other hand, advertise and write policies on a national level. A small company is likely only open during regular business hours, while a large company may be open 24/7 with the help of regional call centers. Large, call center-driven insurance companies may also have local offices to help customers who prefer to do business in person, but those local offices are usually limited in number. Geico is an example of a large insurance company with both call centers and limited local offices.

Top 10 largest insurance companies by market share

When comparing multiple quotes from different insurance companies, many drivers find it easier to start with the largest companies. The top 10 largest car insurance companies based on market share represent the majority of drivers in the U.S.

Pros and cons of a small insurance company

Pros

Possibility of more personalized attention

There is a greater likelihood of getting the “personal touch” with a smaller company. Since they are usually staffed by local agents, you probably have a name of someone to call when you have questions or need help with a policy and they may remember you without prompting.

Your agent knows your area

When you insure with a local agency, you can rest assured that your agent is familiar with your area. When you call a large insurance company, the agent you speak with may not live in your state or even the same part of the country as you. Knowing the local area can help your agent stay on top of insurance or claims trends.

If the business is locally owned your money may stay in the community

To some people, where their money goes is an important factor in the companies they choose to do business with. With a smaller, locally owned insurance agency or company it’s possible that the money you spend will be put back into the community you live in. You will also be supporting job growth in your area.

Cons

Potentially not as financially stable

Many smaller companies may not have the financial stability of a larger company. This is due to the smaller amount of money coming in. They also may not have access to as much reinsurance as a large company has.

Customer service may be less available

Your local agency may not be as busy as a large call center so they may answer the phone quicker, but they probably won’t be available 24/7 like a large company usually is.

Less online self-service options

Smaller, local insurance companies might not have a customer-friendly website or mobile app that you can use to service your policy.

Pros and cons of a large insurance company

Pros

More likely to be financially stable

Larger companies have more capital to pull from, deeper pockets and usually, a longer history. This makes them more likely to be financially stable, which is vital for its ability to pay out claims in a timely manner.

More online self-service options

Large insurance companies are more likely to have more resources to create online self-service options like a website or mobile app that allows you to make policy changes. A large insurance company may also offer digital ID cards. These digital tools can make it easier for you to manage your policy.

24/7 customer service

Larger companies are more likely to have 24/7 service. Around-the-clock service can be important for those who work tight schedules or for policyholders who want reassurance that an agent will always be available in case of a claim.

Cons

Less personal attention

Since you never know who you will get on the phone or if you are dealing strictly with an online portal, a larger company may provide less personal attention for your liking.

May need multiple agents for all of your different policies

Many large companies have separate departments dedicated to each type of policy. For instance, you may need to be transferred to multiple agents if you want to handle your homeowners insurance and auto policy in one phone call.

Potential for long hold times

Although a large insurance company may be open 24/7, that doesn’t mean they will always have the capacity to answer the phone immediately. This is especially true during claims-heavy times, like after a natural disaster.

Which one should I choose?

Instead of focusing on the size of a company, the best approach is to evaluate what is most important to you when making your decision. Once you know what works best for your lifestyle and driving needs, then you can narrow down your options. For example, if strong customer service is your top priority, then choosing a carrier with high customer service ratings with J.D. Power might be the way to go.

Other aspects to consider include financial strength ratings, such as those through AM Best and S&P, which rate a carrier’s historical ability to payout claims. If digital tools are a higher priority than talking on a phone with a local agent, then keep this in mind when choosing. Overall, selecting the right carrier comes down to which one provides the coverage you need, while balancing customer service, digital assets, financial strength and budget.

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