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Health Insurance Q & As

Question 3 of 4 in Considerations When Buying Health Insurance Purchase
Ways health insurance companies can use advertising to mess with you
When shopping for health insurance, you are somewhat at the mercy of advertisements disseminated by insurance companies or their agents purporting to offer health coverage that will meet your specific needs. You should always be very skeptical of this advertising and, as quickly as possible, go beyond the advertising and any other supplemental materials to see the actual wording of the health insurance policy itself (the legal contract between you and the insurer). But until you can do that, you will have to deal with advertisements, other descriptive documents, and agent representations.

Here are some of the ways an insurer or agent can deceive you with their advertising:

  1. Omitting information or using words that have a tendency to mislead or deceive even if the prospective purchaser has the opportunity to review and return the policy. Insurance concepts and terminology are difficult for the layman to grasp. When an insurer adds to the confusion by omitting information or using deceptive words, you can wind up buying something different than what you thought you were buying. States have laws and regulations to help protect the public from this deceptive practice, but it is your responsibility to ask the insurer for a copy of the actual policy for review. The actual health insurance policy is the only legal document and that is what you must rely upon to determine your actual coverage.

  2. Using words such as "all", "full", "complete", "comprehensive", "unlimited", "this policy will help pay your hospital and surgical bills" or similar words in a way that exaggerates policy benefits. It is wise for you, as the purchaser of new insurance, to immediately read the new policy to determine if the new policy actually provides the scope and type of coverage represented to you at the time of sale. Policies have a free-look period during which you, the purchaser, can return the policy if it is not what you thought it would be. Be sure to carefully read your new policy immediately after you receive it.

  3. Wording a policy limitation, exception or reduction in a positive manner to imply that it is a benefit, such as describing a waiting period as a "benefit builder" or stating "even pre-existing conditions are covered after two years." If you are unsure what a term such as "benefit builder" means, ask for an explanation and don’t let up until you are fully satisfied that you know what your coverage is. Don’t allow yourself to be deceived by positive sounding words and phrases. Don’t buy the insurance if it is not clear to you what you’re buying.

  4. Using words such as "tax free", "extra cash", "extra income", "extra pay" to mislead a prospective purchaser into believing that the policy advertised will enable the purchaser to make a profit from being hospitalized. This is a deceptive practice to characterize the insurance as something it is not. Insurers or insurance agents who advertise in this way should be avoided. Health insurance is designed to cover medical expenses, not to provide the insured with the opportunity to make a profit.

  5. Advertising a single disease policy to imply broader coverage. Read your policy when you get it to be sure you have the coverage you thought you were purchasing. All health policies have restrictions and limitations on coverage. Be sure you know what all of them are for your policy.

  6. Advertising a single disease without prominently displaying the limited nature of the policy with wording similar to the following: "THIS IS A LIMITED POLICY" or "THIS IS A CANCER ONLY POLICY." Not every policy limitation or restriction must be so advertised. But for policies that have unusually limited or specific coverage, their limited nature must be highlighted.

  7. Advertising a policy sold by direct response as being "low cost" because no agent commission is involved when, in fact, there are substantial marketing costs for direct response selling. Be wary of any advertisement that suggests it is advertising low cost insurance. You get what you pay for. There are no exceptional low-cost deals when it comes to insurance. If the cost is low, the coverage must be very limited in some way. Make sure you know what those limitations are.

  8. Failing to show exceptions, reductions and limitations in coverage and waiting periods before coverage begins when showing the benefits. This is just plain deceptive. This type of advertising raises questions about the integrity of the insurance company and/or the agent. Know as you read an advertisement that there are limits to all coverage. So, if no limits are shown when discussing benefits, you know something is wrong. Ask for an explanation of the limits. If you are not satisfied, move on.

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