16 Ways To Cut Down Your Insurance Rates

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If you're buying life, disability, long-term care or health insurance, your insurance company wants to know more about you. Depending on the type of policy, it could inquire about your habits, medical records and family history. Based on the answers, it will slot you in one of several categories that will help determine just how much you pay for coverage.

What you say and how you say it can make a difference in how your insurance company sees you and what it charges.

"It's not enough to say you got a good rate," says Randy Herz, senior vice president of Herz Financial, an insurance advisory firm in Farmington, Conn. "You have to look at what their classifications are. Then you have to understand your own health. Health is one of the biggest factors in determining the cost of your insurance."

Here are some tips from insurance insiders to help you get the best health ranking -- and the lowest rates:

Communication counts

Tell the truth, the whole truth and nothing but the truth. Think that leaving something shady out of your health history might help? Wrong, for two reasons. First, the insurance company will likely find out (it is reading your records, after all), and it will assume the problem is severe because you didn't mention it. Even worse, if you withhold information that the company regards as material, it could cancel your life policy within the first two years, says Bob Hunter, director of insurance for the Consumer Federation of America.

Give your complete health story, but do it on your own terms and give the complete picture. Don't just say you have high blood pressure. Say you were diagnosed with high blood pressure five (or however many) years ago and have successfully controlled it with medication.

"The consumer should think about it from the side of the insurance company," says Robert Hoyt, head of the risk management and insurance program at the University of Georgia and president of the American Risk & Insurance Association. "To the extent you give them good, complete information and reduce the uncertainty, then ultimately you're going to get a fairer price."

If your agent or broker knows what wrinkles might give you a problem, he can shop you to the companies most likely to take you on at a good rate.

Watch your language. Sometimes incomplete answers can paint a bad picture. And insurance underwriters are trained to assume the worst. So be clear and complete in your answers. If you had a nonaggressive cancer removed from your face one time several years ago, don't simply say you had cancer removed, says David Johnson, an insurance agent and board member with the Georgia Association of Health Underwriters. List the specific type -- basal cell, for instance -- and that it was done once with no recurrence.

Sometimes an application will ask the ever popular question, "Which of the following conditions have you been treated for?" Instead of just checking "chest pains," include the fact that it turned out to be indigestion and no follow up was needed.

Know the rules of the game. "You need to ask what the (health) ranking is based on," says Hunter. "There should be objective criteria. And you really should shop a little. The criteria vary."

Find out what your ranking is with a specific company and why, says Hunter. It could be that something they don't know will improve your ranking and decrease your premium.

Shop around. It's common consumer advice, but it can be even more important with insurance. Two different companies can view a person's health and the risk he or she poses very differently.

"Most companies try to put you in the right slot," says Hunter. "But if they make a mistake, you don't want that to be the only one you talked to."

Even the lingo varies from company to company. A ranking of "preferred" or "standard" might mean two very different things, with different rates, at two different companies.

Smart shopping is very important for smokers, especially people who only occasionally smoke a cigar or pipe. While some companies will automatically put you in a less-desirable category with a higher premium, others won't penalize you for that once-a-year stogie.

Your physician can help

Alert your doctor. Insurance companies want to talk with your doctor's office and look at your most recent records. Failing that, they might have to use only the records from the Medical Insurance Bureau (a repository for medical records used by insurance companies), which might not be to your advantage. Sometimes a doctor can give some perspective to a condition that might look worse in black and white (for example, a high cholesterol condition that's being treated successfully).

But a busy doctor's office can sometimes drop the ball, says Dave Evans, vice president and publisher for the Independent Insurance Agents & Brokers of America. And the insurance company will only try so many times before it gives up.

So let your doc know you're applying for insurance. A little advance notice can ensure the call isn't overlooked and give you the best chance at a good rating.

Make sure the company gets all of your records, not just some. To get the most complete, up-to-date picture of your health, the company needs all of your records.

"If you've moved or migrated doctors, the fact of the matter is you probably have to be more proactive," says Evans.

Shop quietly. Similar to a lot of inquiries on your credit, a lot of inquiries on your insurability can throw up a red flag, says Herz. Instead, choose an agent or broker who can quietly do some informal shopping to narrow your options before you do anything official. "It avoids you getting declined or rated," says Herz.

In addition, if you use several different agents or brokers, let them know you're shopping around. That way, "everyone knows what they're working with and it might make them more competitive," says Herz.

Pick your insurance professional carefully. Not every agent is up to the task, especially if you've had some health problems in the past.

"If you're dealing with someone who does this a lot, they can help coordinate and shepherd you along because they are comfortable with the process," says Evans.

If you anticipate problems, it's especially important to have someone who knows the system. This can be an agent or broker who knows which companies are likely to give you the best rates and someone who knows how to talk to underwriters to convey the true risk -- or lack of risk -- you would pose.

"The worse your health is, the more this matters," says Herz.

About your vices: Cut them out

Develop good habits. The insurance company probably won't ask how many times a week you work out, how many grams of fat you consume or how many glasses of water you drink. But all of those things impact the criteria they will examine. So hit the gym, lose those extra pounds and keep yourself healthy.

"These things can make a difference for people, not just in getting coverage but in the price you'll get," says Evans.

Want to drop 30% from your life insurance premium? Kick the cigarettes.

"Smoking can add up to 30% to the cost of your life, disability and health insurance premiums," says Johnson.

Avoid drugs and alcohol. If you take illegal drugs, you're not going to find an insurance company that wants to take you, says Johnson.

"If (a person) has a recent history of drug use, they're not going to be able to get insurance," he says.

If you're a recovering alcoholic, "You're probably going to be able to get coverage, but it could be a higher premium," says Johnson. Emphasize, with medical records to back you, how long you've been sober. The insurance company could see a relapse as a risk to them, so the more you can show how unlikely that is, the better for your rates.

Prepare for your exams. In some cases, the insurance company will require either a physical or a short exam by a paraprofessional, which can include taking your vital signs and drawing some blood.

To get the most accurate reading, schedule it first thing in the morning on an empty stomach. (Obviously, if you have a condition that makes that tricky, talk to your doctor first.) Give up vigorous exercise like that three-mile run 24 hours in advance. Get a good night's sleep. And some experts recommend forgoing your morning coffee, or even water.

Follow up on the details of your medical records. Do your records contain a recommendation for a test that you never got? The insurance company could see that as a bad sign, says Herz. "Have the doctor note in your records that you didn't need it after all -- or get it done," he says. Otherwise the company is likely to think that you could have some undiagnosed problem.

Think about your future. If you're healthy now and considering buying term life insurance, make sure that it's renewable and convertible, says Evans. "What that means is that you can convert to permanent coverage without a physical. That would be worth paying extra for," he says.

Keep trying and keep asking questions

Try to get coverage even if you've had health problems. Work with a professional you trust and have him quietly look into what kind of ratings you would get, says Herz. Bear in mind that a number of conditions aren't the black marks they used to be.

"A person who had open-heart surgery used to be declined," says Herz. "Now they can get regular rates."

Ditto for folks who are using medications to control conditions such as high blood pressure and high cholesterol.

"I've seen people who have cancer, heart (problems), all sorts of things, get insurance because they were able to get a favorable prognosis," says Evans.

Ask why. If you are declined or end up with rates higher than you were expecting, find out why. Talk with your agent and ask how to get a copy of your records from the Medical Information Bureau, says Evans.

Don't give up. "Don't consider a (lower health ranking) or decline in the past as indicative of future events," says Herz. It could be that last time around your agent didn't work hard enough for you, or it could be that today, with new drugs and treatments, your condition wouldn't pose as much of a risk, he says.

And time does heal -- even in the insurance business. "Sometimes, the further you get from (an event)," says Herz, "the better off you are."

By Dana Dratch, Bankrate.com

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9 Vital Questions To Ask Before Choosing The Right Health Plan

The open enrollment period for your health-insurance plan comes once every year, usually during the fall. The corresponding paperwork typically generates as much enthusiasm as your yearly tax forms. But don't be tempted to just put a check mark next to your current plan. With so many insurers and employers raising health-insurance premiums and scaling back benefits, you need to know how your health plan stacks up against any others offered to you at work and whether it's the best choice for you.

After all, you're stuck with your decision for a whole year. If you don't know that your plan is dropping coverage for your brand-name prescription allergy drug, you'll be in for a rude awakening next year when the pharmacist asks you to hand over $180 for 100 tablets rather than your usual $25 co-payment. You won't be able to go back to your benefits administrator and ask to switch to a plan that will pay for your prescription.

The following information will help you make the best decision during the open enrollment process.

What types of changes can I make to my health-insurance plan during open enrollment?

If you're not currently enrolled in a health-insurance plan, you may enroll at this time. If you are enrolled, you may switch plans (if this is an option), correct inaccurate information, or add eligible dependents, such as a spouse and children not previously covered.

Which is more important when choosing a plan: cheaper premiums or less expensive co-payments?

It depends on your situation. If you're young and healthy, you can go for lower premiums and higher co-pays. But if you're older, have a chronic health condition, or have young children who make frequent visits to the doctor, you're better off with higher premiums and lower co-pays. You also have to weigh the value of your health plan vs. price. If you go with a cheap health plan but it doesn't pay for the benefits you need, you are not getting good value for your health-insurance dollars.

What is a lifetime maximum benefit?

A lifetime benefit maximum is a cap on the amount of benefits available to a policyholder. The cap is designed to keep the cost of benefits affordable and to stabilize potential future costs. Many health plans cap lifetime benefits at $1 million and are most often applied to mental illness, drug and alcohol treatment, or organ transplants.

If a plan has a relatively low lifetime maximum cap, think carefully about how much risk you're willing to assume. Even if you're healthy, the expenses incurred from one severe car accident -- including hospitalization and outpatient physical therapy -- could easily exceed a $100,000 cap.

Can I switch health plans without undergoing medical screening for pre-existing conditions?

Yes. This is the one time a year (unless you experience a "qualifying event," such as the birth of a baby) during which you may make changes to your plan without having to sit out any pre-existing condition exclusion period. Otherwise, late enrollees in group health plans may have to wait up to 18 months for coverage of pre-existing conditions.

What's better, an HMO, PPO or POS? And what is an HMO, PPO and POS?

There are several health plan varieties, including traditional indemnity fee-for-service plans (FFS), health-maintenance organizations (HMOs), point-of-service plans (POS) and preferred provider organizations (PPO). Each plan has its own features to consider before making your choice.

HMOs are the least expensive, but also the least flexible. They require that you select a primary care physician (PCP) and obtain pre-authorizations for certain medical procedures and in order to see specialists. POS plans are more flexible than HMOs, but they also require you to select a PCP.

PPOs give policyholders a financial incentive -- in the form of reasonable co-payments -- to stay within the group's network of practitioners, but you can usually visit out-of-network specialists without pre-approval.

What is a drug formulary and what are pharmacy benefit tiers?

A formulary is the list of medications for which a health plan pays. Most health plans that pay for prescription drug benefits have pharmacy benefit tiers that group certain medications together for pricing purposes. Brand-name drugs that are usually in the top tier are most expensive, while generic medications are in the lower tiers and are least expensive. Your prescription drug co-pay for a medication in the lowest tier may range from $5 to $10, while your co-pay for drugs in the highest tier may range from $25 to $50. Most health plans have three or four pharmacy benefit tiers, but some have as many as seven.

What are FSAs and HSAs?

A flexible spending account, or FSA, is a benefit plan that allows companies to give their workers the opportunity to pay for their out-of-pocket health and dependent care costs on a pre-tax basis, which -- over time -- lowers payroll-related taxes for both the employer and employees. However, if you don't use the money you've set aside by the end of the year you lose it.

A Health Savings Accounts, or HSA, is technically a trust. It's designed to let you save money specifically for health costs, and receive a tax break in the process. HSA funds not used in one year can roll over to help pay for future expenses the next year, unlike the flexible spending account.

How can I judge the quality of competing health-insurance plans?

For those who have a choice of health plans, price and whether the family's doctors participate in the plan's network of doctors are the most important factors. However, there are other criteria to use.

Accreditation groups, such as The National Committee for Quality Assurance, measure plans using a variety of quality standards. Ratings companies, such as Standard and Poor's, A.M. Best, and Moody's Investors Service, give you a picture of a health plan's financial strength. "Report cards" published by consumer groups, independent Web sites, and state insurance officials are another good source of consumer satisfaction with health plans.

Who can help me if I have questions?

Your human resources director or benefits administrator at work, and/or insurance company customer service departments, can answer most of your questions. Health-insurance analysts with your state department of insurance can also answer your health-insurance questions.

If you have questions about a self-insured health plan (meaning your employer pays all your health-insurance claims), contact your regional office of the United States Department of Labor (DOL). Self-insured plans are governed by the Employee Retirement Income Security Act (ERISA) and are regulated by the federal government, not your state department of insurance.

On the Internet since early 1995, Insure.com is a leader in providing insurance information and is unequalled in its breadth and depth. The site currently hosts more than 20,000 pages of content, including interactive tools to assist consumers in their insurance decisions, and adds 30 to 40 new items each week. Insure.com is regularly ranked as one of the Web's best providers of consumer insurance information and guidance.

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