Ever wondered how international health insurance premiums are derived? Well, there are two rating methodologies in use by health insurance providers. That is ‘community rating’ and ‘experience rating’ . These rating methods determine how much an individual or group would pay for their international health insurance.
Experience Rating
Under this system of rating the individual would have their premiums determined based on their present health condition and other risks associated to that person. These can be applied to specific groups and premium of the group would be based on the health risks faced by that particular group.
The aim of such a system is to allow groups or individuals to pay less as it is based purely on their experience. Example of this would be a young healthy individual versus a sick or elderly individual.
Community Rating
This rating system requires premiums to be charged based on the people within a given area. This would mean that everyone in that defined community would be paying the same premium.
Suppose a young gym instructor and an elderly man with heart disease are enrolled into a community rated policy. The premium paid by both in such a system would be the same.
Within community rating for international health insurance you will find that there are two kinds of rating one being Pure community rating and the other being adjusted community rating. In adjusted community rating demographic factors such as age, gender and nationality are taken into consideration whereas in pure community the costs of medical care are spread across the entire community equally. This essentially means that those who are healthier support those who are not as healthy.
Which rating method is better you might ask?
Well, this is debatable as both methods have their pros and cons. Community rated policies distribute financial burden among the community, therefore a sick person can obtain subsidized premium rates with the support of the premiums paid by a healthier person. Having said this, these policies often tend to be more expensive. Experience rated policies do offer lower premiums for healthier individuals, but this also means higher costs for those who are less healthy. Therefore, before choosing your international health insurance you must keep in mind your specific needs. Surf to our awesome comparison page to compare and fine-tune policies in greater detail, see them side by side and find out which one best fits your needs.
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