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Health insurance customization creates savings

KM | July 9, 2008

There are only a few ways to achieve real cost savings with health insurance. Insurance laws in each state regulate the price of health insurance based on an actuarial formula. Since health insurance is priced based on the dollar amount of benefits paid out for claims, lower priced coverage must necessarily mean lower benefits and greater financial risk for the insured. The key to achieving effective savings is to cut benefits in areas which are unlikely to be important to you, and keep adequate coverage for catastrophic losses.

This cost-saving approach was successfully used for decades by employers who purchased group coverage for their employees. A business with all male employees, for example, would historically purchase health insurance without maternity coverage while an all female business could purchase insurance without testicular cancer coverage. Eventually insurance laws changed to require that all business health insurance include maternity benefits and testicular cancer. This type of savings through customization of coverage is no longer available to employers.

Individuals who purchase their own insurance are not subject to mandated coverage rules. Customization of coverage remains the best way to reduce the cost of insurance with minimum increase in risk.  Yet despite the flexibility allowed by law, few health insurance products offer a wide range of customization options.

The primary disadvantage of expanding customization choices is the increase in complexity of the insurance product. Buyers can feel overwhelmed by the range of choices. Consumer product sellers often report lower sales for products with more options available to the buyer. Car manufacturers, for example, known that they can sell more cars by decreasing the number of options available in the purchase transactions. This is why Honda cars are available in only three colors and three levels of trim. Product customization choices might be good for some buyers but they are not necessarily in the best interest of the product manufacturer. As a result of this few health insurance companies have been willing to improve the level of customization available in their products.

The leading provider of individual health insurance for affluent Americans recently expanded on this theme with the introduction of cost-saving options on its "CeltiCare Preferred" policy. Celtic Insurance enjoys a longstanding reputation for high quality coverage with its "CeltiCare" product line available in most states. Celticare is designed for consumers who have been willing to pay higher premiums for more benefits-rich coverage. Yet in today's economy even affluent buyers need to achieve savings in health insurance. The addition of the "preferred" features and other customization options makes cost savings available without necessarily reducing benefits for all policyholders. A wide range of "a la carte" and preventative benefits can be used to further increase overall coverage. The CeltiCare Preferred products offer a high $7,000,000 lifetime coverage - significantly more than most other health insurance policies.

Our online Celtic Insurance affiliate Web site www.Celticenrollment.com teams up with the professional services of "OnlineAdviser" to achieve an industry-leading level of enrollment support needed to make the best use of these customizable insurance options. This winning combination of increased consumer options plus professional personal enrollment support resulted in the insurance company's second highest levels of enrollment for the first half of 2008. Pricing, selection of benefits, enrollment support and application submission are all handled directly online at the secure Web site with no need for a medical exam or agent interview. High quality coverage enrollment can be completed in about 30 minutes. The application status is confirmed by e-mail and an underwriting approval is usually available within a few days.


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