Why Is Health Insurance Different From Car Insurance?

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    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    In theory they both operate on the law of large numbers to spread a risk.  They both segment the policyholders; however, they use different factors.  Your auto insurer is going to be interested in the year, make and model of the car and will be less interested in your age.  Your auto insurer will not be interested in your medical history, but your health insurance carrier might be.  Regardless the companies maintain records that help them evaluate the possibility and severity of claims and from that information they develop a standard rate.  Those rates then are applied to individual applications.
    Answered on March 25, 2014
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