5 Questions to Ask When Shopping For Health Insurance

Written by Mike

A simple look around you is probably all it will take to remind you of the importance of saving money at every opportunity.  As important as it is in today’s economy to save money every chance you get, there are certain categories of your life where saving money can actually cost more in the long run.  One of these areas is your health insurance – and the company you choose to help protect your financial future in the event of a claim is more important than ever before.

Here are 5 critical questions you must have answered when selecting a health insurance company.

Are You Financially Strong?

The answer to this question is more important than ever before because large, wealthy companies that have decades-long traditions of financial strength and stability are teetering on the brink of insolvency – or are surviving on the strength of government bailouts.  You can’t afford to gamble with your family’s financial security, so you need to do your homework and thoroughly check the financial background of any insurance company with which you’re considering doing business.  A.M. Best provides ratings based on the perceived financial strength of an insurance company and their ability to pay claims.  In addition, you state’s Insurance Department probably has historical data available as well.

Are You Licensed to Market Insurance in My State?

Don’t just assume that an insurance company is licensed to sell insurance in your state.  Ask the company if they’re licensed – and then double check the information with your Insurance Department.  While some companies are licensed to market multiple lines of insurance, not all companies are licensed in every state for all lines of insurance.

How Quickly Are Claims Paid?

As important as it is to have reasonable health insurance rates, it’s also important that an insurance company have the means – and the willingness – to pay legitimate claims in a reasonable period of time.  While most state Insurance Departments don’t track exactly how long it takes for claims to be paid, they do closely monitor complaints.  Most of these state agencies keep track of the reasons for complaints, as well as the number of policyholders.  By simply asking the question you can glean valuable information about an insurance company’s reputation.  A high unresolved complaint ratio relative to the number of policyholders may indicate that a carrier is not as committed to paying claims as they are in writing insurance policies.

How Long Have You Been in Business?

Length of time in business is no guarantee that they are necessarily a strong company, but it does tend to paint a picture of their level of stability and their commitment to financial success.  You shouldn’t use these single criteria as a reason to do business with an insurance company, nor should it be a reason not to do business with a health insurance company.  Instead, it should be a single component in a multi-stage process of determining a company to handle your health insurance needs.

Will You Be Around To Answer My Questions?

Customer service is important.  From premium questions to resolving claims issues, there are many reasons you might have to contact your insurance company.  You want to know that when you contact your health insurance company that they will do their level best to answer your questions accurately, courteously, and quickly.  If they don’t take phone calls or answer questions by email, you could be reduced to hoping you can glean the answers you need from the dozen or so pages of legal mumbo-jumbo which comprises your health insurance policy.

There is one last question you should strive to answer before making health insurance decisions.  Should you use a captive insurance agent who represents a single insurance carrier or should you go with a high-quality broker who will shop the market and give you multiple choices depending on criteria that you select?

This is perhaps one of the most important questions of all, because the answer you come up with will determine the kinds of choices you have available to you.  A captive insurance agent, one who represents a single insurance company, represents a single viewpoint and in most cases, has relatively few choices available for prospective clients.  On the surface, it may appear that one of these individuals has multiple options from which you can choose, but in many cases these choices are like choosing one of several varieties of vanilla ice cream.

A high-quality insurance broker, on the other hand, can give you many choices with a single click of your computer mouse.  High deductible or low?  HMO, PPO, or traditional?  Prescription drug plan?  Maternity coverage? A good insurance broker can give you all of these choices, and can also steer you towards a safe, stable company with great customer service who will pay claims quickly.

You deserve the best options for your budget and your lifestyle – and if you ask the right questions to find a good health agent or broker you can find the ideal policy for your needs.