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What The Insurance Companies Aren't Telling You About Your Premium
By: Marcus Dubois
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
About the Author:
Marcus Dubois is a veteran in the insurance industry, and recommends InstaQuoter
to get an instant insurance quote. See http://www.instaquoter.com/ for more
information
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