Monday, November 26, 2007

Medical insurance by Level Premium

Dear Mr. Tan,

Why do the insurance company change increases its premium each year, as I grow older. Why can't they charge the same premium throughout my life, like a life insurance policy?


There are two big factors affecting the cost of medical care:

a) Age. As you grow older, you need more medical care
b) Escalation. As the years goes by, the cost of medical care increases due to technology, more demand and other factors.

It may be possible to charge a level premium to take care of age, but it still does not take care of the escalation of medical charges. Hence, it is not possible to fix a level premium.

Read this FAQ:

1 comment:

Anonymous said...

From another prospective:

a. Age - why is it that when we grow older we need more medical care? At which age are we talking about here? My friend's grandfather is 70 and he is still very healthy and never visited a doctor ... and for many years, not even down with flu or cold. since we have a healthy lifestyle these days, we are suppose to have less medical care.

b. Isn't technological advances supposed to bring medical cost down? If technology advances increase medical costs, then why have them research in the first place?


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