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16 ways to get better insurance rates

Thinking about your health in the new year? Chances are, so is your insurance company.

If you're buying life, disability, long-term care or health insurance, your insurance company wants to know more about you. Depending on the type of policy, it could inquire about your habits, medical records and family history. Based on the answers, it will slot you in one of several categories that will help determine just how much you pay for coverage.

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What you say and how you say it can make a difference in how your insurance company sees you and what it charges.

"It's not enough to say you got a good rate," says Randy S. Herz, senior vice president of Herz Financial, an insurance advisory firm in Farmington, Conn. "You have to look at what their classifications are. Then you have to understand your own health. Health is one of the biggest factors in determining the cost of your insurance."

Here are some tips from insurance insiders to help you get the best health ranking -- and the lowest rates:

1. Tell the truth, the whole truth and nothing but the truth
Think that leaving something shady out of your health history might help? Wrong -- for two reasons. First, the insurance company will likely find out (it is reading your records, after all) and it will assume the problem is severe because you didn't mention it. Even worse, if you withhold information that the company regards as material, it could cancel your life policy within the first two years, says Bob Hunter, director of insurance for the Consumer Federation of America.

Give your complete health story, but do it on your own terms and give the complete picture. Don't just say you have high blood pressure. Say you were diagnosed with high blood pressure five (or however many) years ago and have successfully controlled it with medication.

"The consumer should think about it from the side of the insurance company," says Robert Hoyt, head of the risk management and insurance program at the University of Georgia and president of the American Risk & Insurance Association. "To the extent you give them good, complete information and reduce the uncertainty, then ultimately you're going to get a fairer price."

If your agent or broker knows what wrinkles might give you a problem, he can shop you to the companies most likely to take you on at a good rate.

2. Watch your language
Sometimes incomplete answers can paint a bad picture. And insurance underwriters are trained to assume the worst. So be clear and complete in your answers. If you had a non-aggressive cancer removed from your face one time several years ago, don't simply say you had cancer removed, says David Johnson, an insurance agent and board member with the Georgia Association of Health Underwriters. List the specific type -- basal cell, for instance -- and that it was done once with no recurrence.

Sometimes an application will ask the ever popular question, "Which of the following conditions have you been treated for?" Instead of just checking "chest pains," include the fact that it turned out to be indigestion and no follow up was needed.

3. Know the rules of the game
"You need to ask what the [health] ranking is based on," says Hunter. "There should be objective criteria. And you really should shop a little. The criteria vary."

Find out what your ranking is with a specific company and why, says Hunter. It could be that something they don't know will improve your ranking and decrease your premium.

4. Shop around
It's common consumer advice, but it can be even more important with insurance. Two different companies can view a person's health and the risk he or she poses very differently.

"Most companies try to put you in the right slot," says Hunter. "But if they make a mistake, you don't want that to be the only one you talked to."

Even the lingo varies from company to company. A ranking of "preferred" or "standard" might mean two very different things, with different rates, at two different companies.

Smart shopping is very important for smokers, especially people who only occasionally smoke a cigar or pipe. While some companies will automatically put you in a less-desirable category with a higher premium, others won't penalize you for that once-a-year stogie.

5. Alert your doctor
Insurance companies want to talk with your doctor's office and look at your most recent records. Failing that, they might have to use only the records from the Medical Insurance Bureau (a repository for medical records used by insurance companies), which might not be to your advantage. Sometimes a doctor can give some perspective to a condition that might look worse in black and white (for example, a high cholesterol condition that's being treated successfully).

But a busy doctor's office can sometimes drop the ball, says Dave Evans, CFP, vice president and publisher for the Independent Insurance Agents & Brokers of America. And the insurance company will only try so many times before it gives up.

So let your doc know you're applying for insurance. A little advance notice can insure the call isn't overlooked and give you the best chance at a good rating.

6. Make sure the company gets all of your records, not just some
To get the most complete, up-to-date picture of your health, the company needs all of your records.

"If you've moved or migrated doctors, the fact of the matter is you probably have to be more proactive," says Evans.

7. Shop quietly
Similar to a lot of inquiries on your credit, a lot of inquiries on your insurability can throw up a red flag, says Herz. Instead, choose an agent or broker who can quietly do some informal shopping to narrow your options before you do anything official.

"It avoids you getting declined or rated," says Herz.

-- Posted: Feb. 18, 2004




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