Insurance Agent Forum

[healthagent]

Can anyone tell me why health insurance is not a one year contract?

I don't need to waste everyone's time here with countless examples of things you purchase that you simply are contractually obligated to pay.

It seems the carriers spend a lot of money to obtain and underwrite a case and I'm wondering how it came to pass that someone could drop it at will.

A client in MD can sign up for Aetna, get pregnant next month - baby 9 months later, cancel and Aetna eats it?

Yes...a one year contract would mean the "Mega" client would be screwed.

However, if it became known and a big "One Year Contract" was plastered across all applications/policies wouldn't that force people to look a little deeper before signing?

Lord - you can't get Sales Genie without a one year contract.

[xrac]

A few years ago I had a group health situation on my business where there was some provision that they had to be notified before any cancellation. The broker/agent had not advised us. We changed carriers and agents. The company (I think it was Principal) wanted to charge something like three months back premiums. We finally settled it for like one months premium but it wasn't fun.

[moonlightandmargaritas]

Originally Posted by healthagent

Can anyone tell me why health insurance is not a one year contract?

My guess (and it's only a guess) is that it's a "statutory" thing with DOI's...

Auto insurance is not generally a minimum contract either, although here in Florida they can "short-rate" you if you cancel in the middle of a term.

[TXINSURANCE]

Isn't the "group" 1 year contract due to the section 125 cafeteria plan and IRS rules?

As much as I would like a guaranteed year out of EVERY individual case - people could simply not pay their bill.

I am not sure I would support a one year contract, and legislatively it would never fly. What if someone gets a job with benefits? What if someone turns 65? What if someone gets married and their spouse has a plan? There are 100 scenarios other than canceling or not paying your bill.

I am leaning toward this is more of an IRS thing - maybe someone who is a CPA can comment.

[joshril]

Imagine the resources insurance companies would need to collect from people that don't pay their premiums... They would still charge the agents back I'm sure.

[Bob_The_Insurance_Guy]

One year contracts would bring out the "stick-em-and-bleed" unprofessionals we currently see in the Senior Market. It is actually done to preserve our professional dignity and whatever unfortunate accident or illness may befall the client in the future.

It's in the best interest of both.

If anything, I would like to see parenthood be a one-year renewable contract. Too many parents emotionally and physically abuse their children (some by torment, others by spoiling the little brats -which is a type of abuse)

[healthagent]

Also, one year contract would likely lead to piss-poor customer service on the agent's end. All valid points.

[Alston]

I'd vote against the one year contract.

The person who is between jobs might come less inclined to purchase a policy. The person who is thinking of moving out of state might be less inclined to purchase a policy as well. Those who are wavering between "can't afford" and "can afford" will also be less likely to purchase.

This might tend to disproportionately take younger healthy people out of the pool.

[HomeService]

The insurance companies give a term contract on health. One month term, 3 months, semi-annual, etc.

Not sure if you can even pay an annual premium or quarterly on some/most health policies any more... mostly monthly bank draft.

Most insurance companies don't want the same health premiums coming in every year anyhow. They would rather have a higher premium and with less coverage, and if it gets locked in for a year, there's less growth possibilities there.

[NewHealthStrategies]

Health insurance contracts are aleatory contracts... This will also explain why premiums are considered "as earned".

Go get your licensing studgy guide out if your not sure what an aleatory contract means..... long time ago for most of us.

[somarco]

one year contract would likely lead to piss-poor customer service on the agent's end

How do you figure that?

[healthagent]

If the agent knows the policy can't lapse yet the client needs help with an issue then....

[GreenSky]

Originally Posted by healthagent

If the agent knows the policy can't lapse yet the client needs help with an issue then....

John -

A good agent helps regardless of potential lapse. The reason I know this is because of the lock in provision on MA plans. I still help my clients even though I know they can't change their coverage until the end of each year.

Perhaps it's a matter of pride. I feel that each client is MY client, not the insurance carrier's client and have an obligation to that person. Agents who think clients are simply a "number" are not good agents.

Rick

[healthagent]

Obviously I agree.

[InsuranceBenefitsGroup]

I support the one year "lock" unless the insured has access to employer sponsored benefits. I'd rather have this conveyed at the point of sale rather than earning 1 month of commission. One hour of my time is worth more than that.

[Soaringagent]

Good customer service and knowlege is the key to keeping clients and building referrals.