Primary Premium Factors

MR. WATSON: The word "modes" just means the frequency of the premium payments, so like weekly, monthly, annual. No big deal.

MR. WATSON: Premium Factors .

MR. WATSON: These are primary premium factors of health insurance.

• M -- morbidity tables.
• I -- interest rate,
• X -- expenses.

MR. WATSON: Morbidity is the expected incidence of sickness or disability within a given age group during a given period of time. It is to health insurance what mortality was to life insurance.

 

Participating vs. Non-Participating

• Individual health policies are nonparticipating (...if you own an individual health insurance policy, do you get any money back at the end of the year?
• Group health policies may be participating , ...If the Florida School of Insurance has a group health policy, and it's issued through a mutual company, if the expenses are low, I could get a policy dividend back.

MR. WATSON: Group policies can be participating policies. The group or business is participating in the savings of health costs. So if a business buys a group policy through a mutual company, if

1. the expenses of the insurance company are low and
2. claims are low,

the business might receive a dividend back.

 

Valued Contracts*****know this!

MR. WATSON: Remember you told us, Mr. Greek, what a valued contract is?

GREEK: It's the opposite of a contract of reimbursement or reimbursement approach . Valued contracts pay a specified amount.

MR. WATSON: Health insurance contracts usually pay on the reimbursement approach method. You pay the hospital or doctor and the insurance company reimburses you 100%, or 80%, or 75%. But, a Valued contract pays a stated amount, no more, no less... a stated amount.

MR. WATSON: Three types of valued contracts.

MR. WATSON: Valued Contracts- L.A.D.

• Life insurance - stated amount should you die
• Accidental death and dismemberment - You lose a hand, a foot, a leg, die accidentally, etc., we are going to pay a stated amount.
• Disability income - stated amount, per month, should you become disabled.

MR. WATSON: They pay the amounts stated in the contract if a defined event should occur. No more, no less.

MR. WATSON: Reimbursement contracts pay you the amount that you lost, up to a limit. Ex. if you have a $2,000,000 health policy and incur expenses of $100,000, we pay $100,000.

MR. WATSON: As you progress through the contracts in this course, try to identify how each type of health policy pays it's benefits.