Thursday, April 23, 2009

Buyer Beware of Insurance Trap

Not all health insurance company operates in a strictly ethical manner. There are a number of traps waiting for the unwary. Two of the worst are mail order insurance and cancer insurance.

Mail order insurance

About 2 percent of all health insurance is sold through television, newspaper, magazine, and direct mail advertising. These plans often look attractive, offering large cash payments to the person who is hospitalized, in return of small annual fee. But most of these mail order insurance policies are full of loopholes. Many, for example, do not start paying benefits until the patient’s eight day in the hospital, and most hospital stays are for less than eight days. Others offer a payment of $30 or $50 per day of hospitalization, which is not much help to the patient in paying the $300 or more per day that hospitalization can cost. Moreover, the fine print in mail order policies, often disallows may kinds of claims. You may not be entitled to any benefit for a “preexisting conditions,” that is, any condition for which you have ever been treated before you took out the insurance. Tricky wording allows many mail order insurances to avoid paying the benefits they seemed to promise. It is better to obtain insurance in a group policy through your job or in an individual policy from an insurer who can explain your coverage and answer your question directly.

Cancer Insurance

The fear of prolonged and expensive treatment for cancer has led millions of American to invest in special insurance policies that cover only cancer treatment. As with mail order insurance, the problem with this policies is that these seem to offer attractive coverage, but in fact their benefit are quite limited. Typically, they include coverage for unusual and rarely used cancer treatment but fail to provide the kind of coverage that is really needed, benefit for prolonged hospital stays, for example. Abuses in cancer insurance were recently the subject of a House of Representative hearing. As a result, the sale of insurance policies who coverage in limited to specific diseases has been banned in several states. Some other trick also not all of cancer type can be claimed from the insurance.
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