What the insurance companies aren't telling you about your
premium
Although insurance companies offer peace of mind to the policy
holders, it is important for all customers to remember that they
are for profit companies, and accordingly your own personal
interest is not their number one priority. Consequently, any
insurance company will capitalize on every opportunity to
extract money from its customers. The primary source of income
for an insurance company is the premiums which it levies from
its customers.
The premium is the fee which keeps the insurance policy alive.
Each company collects the premium on a regular basis. The policy
holder is expected to pay the premium on time. Delayed payments
may lead to consequences such a fine or even termination of the
policy. If a lapse in your payments does take place, this will
render the earlier premiums paid by the policy holder useless.
So, in order to reinstate oneself, the policy holder might even
have to renew the entire policy.
There has also been a recent trend of policies being sold at
inflated prices by a few agencies. Some of these companies that
claim to be consulting organizations fail to ask important
questions such as salary and mortgage details that are essential
to assess the appropriate cover. So, an ideal solution to this
problem would to make selling of insurance more transparent. But
like all practical solutions, it is not in everyone's interest
to do so. As a result, insurance companies have lobbied congress
men and women very heavily to ensure that despite the benefits
of transparency, obscurity remains the law.
Another problem with insurance that is often never disclosed by
sellers, is that the insurance premium is also very unstable.
The rates may even change between consecutive billing cycles.
For example, a driver with a recent accident history will have a
pay a much higher premium than a regular driver. Such a driver
will be left with no other option but to pay a high premium,
since insurance has been made mandatory for driver in many
states.
Insurance premiums are also very relative. They are based on
extensive research and statistics. For instance, a policy holder
who smokes might have to pay as much as twice the amount paid by
a non-smoker. Some companies also have a provision wherein the
premiums are reduced if the policy holder changes his habits.
However, evidence based on medical tests will have to supplement
this argument. Premiums may also fluctuate according to market
trends.
As stated previously, it is not always in the best interest of
the insurer to be up front with you regarding the many pitfalls
which surround the purchase of insurance. However, by
understanding not only some of the omissions as well as grasping
the underlying motivations of insurers customers can be must
better situated to make good decisions regarding their insurance
needs