From: jeffrey@algor2.algorists.com (Jeffrey Kegler)
Subject: Re: YA possible insurance policy for contractors
Reply-To: jeffrey@algor2.algorists.com (Jeffrey Kegler)
Organization: Algorists, Inc.
Distribution: usa
Date: Tue, 14 Apr 92 19:51:28 GMT

In article <1410@ocsmd.com> van@zeus.ocs.com (Van Gale) writes:
>I've uncovered an interesting sounding policy for small companies which
>I haven't seen discussed here before.  My apologies if it has.  By small
>I mean my company, for example, with 2 full time employees.
>
>Advantages--    [ Reasonable souning benefits ]
>
>Disadvantage--  Premiums see arbitrary rate increases every year.  They
>                start low as a sales gimmick.  However, agent swears a
>                new policy can be written every year from scratch.

>Has anyone had experience with this policy or United Chambers?

No.

Here is what I think might be going on.  The trick, of course, is in
the term I exerpted.  The policy allows them to increase the rate
based on their experience.  And the agent's assurance you can just
write a new policy at the low lead-in rate is correct.  In fact, that
is part of the problem!

After the first year low rate expires, some people will drop out.
None of those who now have pre-existing conditions will.  They know it
is this policy or none.  The policy now covers a group of people
somewhat sicker than normal and the rate goes up accordingly.  The
less sick drop out again.  This causes the rate to again go up.
Again, the less well take advantage of the opportunity to write a new
policy at a very attractive lead-in rate.

When the policy hits $1000 a month per person, that's $12,000 a year.
(It should not take long for this to happen.)  Almost everyone who
does *not* have a pre-existing condition will drop out at this point.
Noone does not notice a bill like that and noone will pay it who is
not sick.  Thus the rate easily goes to $2000 a month per person.
Only the very sick will not stay with the policy, and now *serious*
rate increases start in.

Thus the policy is good unless you get sick, basically.  True, for
brief illnesses which do not scare off insurers (that is, except for
diabetes, heart attacks, cancer and just about everything you can
think of) you can collect.  You also could pay out of pocket.

>A small voice in my head is telling me it sounds too good to be true but
>the agent is reputable and well established in my small community.

Alas, I really wonder if there is such a thing as a good insurance
agent, anymore, especially in the health insurance business.

What must be looked for is guaranteed renewability at a rate which has
some constraint (some as being based on only age and gender in a large
group).  Otherwise the policy is only good until you get sick, in
which case, you might wonder why not just save the money?  Most else,
deductibles, rate, prescriptions, dental, etc., has to be put second
to this criteria.

Jeffrey Kegler, Independent UNIX Consultant, Algorists, Inc.
jeffrey@algor2.ALGORISTS.COM or uunet!algor2!jeffrey
137 E Fremont AVE #122, Sunnyvale CA 94087


-- 

Jeffrey Kegler, Independent UNIX Consultant, Algorists, Inc.
jeffrey@algor2.ALGORISTS.COM or uunet!algor2!jeffrey
137 E Fremont AVE #122, Sunnyvale CA 94087
Newsgroups: misc.jobs.contract