What Happens To An Insurance Company If They Get Too Many Health Claims In A Year?
A lot of companies are offering medical insurance claiming that they are the best and they provide the finest benefits you could possibly think of
. But how do they keep away from bankruptcy, considering that there may be a time of the year that their members may be claiming health insurances all at the same time?Building a good name as a health insurance company takes a lot of effort and extremely talented statisticians who understand data and trends that might affect how the industry works. The primary downfall that health insurance companies had always avoided is bankruptcy. But how do they do it?
First of all, health insurance companies do not just offer anyone health insurance they tip the scales to their advantage and adjusting cost on an individual basis. As an individual with personal health insurance, you are obliged to pay your monthly dues to make sure that when the time comes that you need health assistance, your health insurance will serve its purpose well.
However as there is a possibility of the health company may get so many claims in a year that they have to rely on banks to raise enough money to pay for these claims. This in turn can lead to a financial loss and bankruptcy to the health insurance provider as they not only have to pay more money than they had earned the previous year, they also have to repay the bank loan.
The only way the health insurance company can make amends is by raising their cost of insurance for the next and following years. And be particularly confident in who they are offering insurance to. So it can be said that health insurance policies might go up in price due solely to this purpose.
Moreover, if you go through the long policies written by health insurance companies, you will come across several rules that are always in compliance. Health insurance companies set these rules or restrictions for claiming health insurances with the intention of avoiding bankruptcy. Or large financial loss in case there are a huge amount of claims. For this reason it is wise to read through the many number of policies on offer and tailoring one to your specific needs, being sure that you purchase cover for the things you need getting the proper advice is highly recommended.
There are also some companies that only provide health payouts for certain amounts, say just about half of your total medical bill. On the other hand, there are health insurance companies that will only hand payouts to certain hospitals in their list. If you have chosen to be hospitalized in a health institution that is excluded in their list, you might not get that health insurance youve been hoping for. This and the reasons above is how insurance companies avoid bankruptcy and continue to do business for another day.
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