Renewal Premiums – Explained

Part A: Increasing your health premium

First paragraph: This explains the need for timely payment of premium and the results of failure to do so. Note that generally, a premium paid to the agent is not regarded as premium paid “to the home office.” You need to make certain your premium is in the possession of the home office by the due date or, at least, by the end of the grace period. That is your responsibility.

Second paragraph: This explains the various situations when the renewal premium rate may be increased by the insurance company. Most of the triggers justifying a possible premium increase are things you, the primary insured, do which increases the risk of exposure in some way. However, there is also lumped together in one paragraph (item i., above), a list of things over which neither you nor the insurance company have control that can result in an increase in premium. These are changes (increases in coverage, basically) required by federal or state law or regulation. The changes precipitated by things you did, apply only to yourpolicy; changes required by law will apply to all of the company’s insureds.

The Premium Rate Guarantee Period referred to in the second paragraph is that period of time (shown on the Policy Schedule immediately following the Issue Date) that must expire before the insurance company is allowed to increase the Renewal Premium, unless one of the nine reasons (a. -i. above) occurs. (The Renewal Premium is the amount charged for your policy for the period of time from one Renewal Date to the next Renewal Date.) If any of these nine reasons exist, the insurer may even increase the Renewal Premium during this Premium Rate Guarantee Period.

The Guarantee Period can be as long as one year or as short as one month. It is entirely dependent on your mode of premium payment (annual, semi-annual, quarterly or monthly). Changes resulting from any of the nine reasons listed above can occur with the very next Renewal Premium, which could be within 30 days if you pay your premium monthly.

As you will see, however, there are some types of Renewal Premium rate increases that are notpermitted during the Premium Rate Guarantee Period.

Part B: Premium increases after expiration of Guarantee Period

Some types of premium increases, however, can only be made after the Premium Rate Guarantee Period has expired. (See j.-l. above) Section j. above refers to an increase in premium based on your attained age. As you get older, your health status changes and the premium may rise. Sections k. and l. above refer to premium increases that can only be made by the insurance company after the Premium Rate Guarantee Period has expired and result from a change in the tablesof premium rates used to calculate Renewal Premium for various classifications (Class) of insureds established by the insurance company. The classifications are established based on a variety of different actuarially determined risk factors. Any changes in premium of this type are made across the board for every insured in that Class—not just you. As you can see from a review of items (i) through (ix) in the sample provision above, premium changes of this type are prompted by a concern by the insurance company that

As you can see from a review of items (i) through (ix) in the sample provision above, premium changes of this type are prompted by a concern by the insurance company that anticipated health care costs are accelerating at a rate beyond that which was expected when the original tables of renewal premium rates were established.

*Wording may vary from contract to contract and from state to state.