Some people often wonder why there can be such a dramatic difference in Medicare supplement rates from one company to another for the exact same policy. There can be many reasons for this, and the most significant reason is due to the claims experience that an insurance company receives. When an insurance company has to pay a claim, it reduces the amount of money they have in reserves, therefore depleting their cash. In order to keep a healthy amount of capital and continue to strive as a business, they will need to collect additional revenue--therefore they increase the policyholder's rate that they pay.
You may wonder why one company receives more/higher Medicare Supplement rate increases than another. Generally, to apply for Medicare Supplement Insurance, you will need to answer a set of health questions to be approved for the coverage. Some companies may require you to answer more health questions than another. When a specific company requires you to answer a large set of health questions, that is basically eliminating unhealthy people from being able to qualify for coverage--therefore not being able to get the coverage if they are unhealthy. This means that Company A--asking many health questions--will likely not have to pay out as much in claims due to the fact that their policyholders are generally more healthy (because they had to answer many health questions). On the other hand, Company B, that may not require you to answer many health questions, may end up getting much more unhealthy policyholders who are going to the doctors more often, thus having more claims the company has to pay. When the company has to pay claims, they will often need to collect higher and higher amounts of premium to compensate for these losses.
When selecting a company to try and obtain the lowest Medicare supplemental Insurance rates, it is important that you see how many questions they ask you to apply for coverage, as well as what their current premium rate is. This will help ensure that you are selecting a company that will remain stable both now and in the future. An average set of health questions a company would ask you are about 15-20 health questions. If a company is asking you 5 or less health questions, that is very low and might signal higher rate increases in the future.
The best thing to do when looking for the lowest Medicare Supplement Rates it to call an insurance brokerage specializing in Medicare Supplement Plans (like us) who can answer all your questions and search for an affordable, yet high quality Medicare Supplemental Insurance company. You can feel free to call us at (855) 419-3826 for help and advice on Medicare Supplements!
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