Monday, March 10, 2008

Some People Just Don't Get It

[Welcome Industry Radar readers!]

I have been in this industry for a long time. Over 30 years. Insurance can be complicated, confusing.

I understand that and go to great lengths to paint with simple, word pictures.

Avoiding words like copay, deductible and coinsurance (except when necessary) I use analogy's to make a point.

One example is explaining what happens to premium dollars you pay to the carrier. Let's face it. Most folks don't have big claims, and certainly not on a regular basis. It doesn't matter if you have a $1000 deductible or a $3000 deductible. Chances are, you will not hit the deductible during the year.

Recently I talked with a couple who has a newborn. They pay $800 per month for a plan with a $1500 deductible and a bunch of doctor visit copays. Their premium is increasing in May by another $150.

After gathering a lot of data on their current plan, how often they use it, expected future needs, etc. I proposed a plan that would provide everything they need, nothing they don't need and still saved them over $300 per month vs. the current premium. (And $450 vs. the renewal premium).

They stalled. One of their children was having ear problems and was going to require tubes in the ears. We agreed to postpone the change until the surgery was complete.

Last week I followed up to see if the surgery was complete and they were ready to move forward.

Again they balked.

After talking it over, they decided to keep the plan they have because they have already met the $1500 deductible.

The new plan has a $3500 deductible.

The projected premium savings (factoring in the rate increase for the existing plan) is over $3000.

They have phantom insurance.

The extra $3600 they will pay over the balance of the year is (most likely) money they will never see again. When you overpay for coverage, you do not get a refund. The carrier does not send flowers or even a thank you card.

They keep your money and send you a renewal rate increase.

Insurance premiums are not a savings account. You do not get extra credit when you pay for coverage you don't need. The carrier wins, and you lose.

Some folks just don't get it.
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