Generally, health insurance is a very simple term “securing your health’. This will help you to choose the doctor of your choice, the health care services which are not covered by the Medicare. You don’t have to rush in hurry and have to wait in long ques which have to do in public hospitals. Private health insurance basically covers two parts- Hospital and Extras Cover

So let’s talk about, what is Premium Financing?

The term Premium Financing stands for the fund which is issued to a company or person at a cost of an Insurance Premium. These premium loans are provided usually by other financial parties. Third party financers also provide financial loans which are termed as a premium financing company. The insurance requesting company or the person has to sign the agreement which is termed as premium financing agreements with the company which provides premium financing, to finances a premium. The arrangement of the loan will last for a year up to the policies’ life. Then the company providing premium financing will pay the bills and insurance premium of that person or the issuer company, in the form of money installments, until the amount of Loan is met. The client who engages in these transactions is aged between 29 to 75 years old, who’s having an assessed valuation of $5,000,000 or more. Because of the emergence of these premium financed indexed policies, young clients are more benefited.

How much will the rise be shown?

The Swiss government has declared, there would be an average health premium rise of 4% w.e.f. 2018. The calculation is less according to the actual percentage as the government has only estimated the standard insurance prices including accident coverage. The calculation has also represented that the percentage rise in policy will only be applied in 18.3% of residents. There could be more rise shown in children’s premium as compared to adult’s premium. So large families will have to face the 6.1% rise in premium more than the national average which is 5.1%.

Why will insurance premium rise in 2018?

All the insurers are deciding to raise premiums to stop cost-sharing funding. Cost-sharing reductions will help consumers in a way to save their incomes. By doing this, the payments done to the insurer will cover the excess cost for many low-income enrollees.

Here are some reasons for rising insurance premiums in 2018:

  • Drug costs are getting higher: The most important thing that is rising are prescribed drugs. Along with the health care cost, high-quality drugs are also hitting the market such as cancer drugs.
  • Companies sniff out to balance high-risks: According to the new law, U.S. health insurance companies cannot charge more or turn down the coverage of the individual patients who have risky medical reports. This is the reason many companies ended up with a higher cost of individual enrollees. So they have decided to increase the premiums of all individual as they cannot rise in the cost of high-risks.
  • Insurance companies do not pay back: back then, the government used to reimburse insurance to individual enrollees that cost more to the company. However, it is decided to cease the program which only increased the cost of insurance companies.
  • Differences in insurance companies: different insurance company’s rate varies from another. Some will increase the minor rate of premiums and others will drastically change the premium programs. Most of the popular insurers will reduce their services in many states and areas to balance their recent financial losses.

It is expected from many big insurance companies, there will be a drastic change in health care cost and their insurance options this year. Health care cost will get higher and so that the company options will get fewer in the market. It has also been said that, if the government will successfully reduce the subsidies and so the premiums go high, the customers will get better deals in future.

Benefits of Health Premium Financing

  • It helps in terminating the necessity of paying the large direct payments to the insurance companies
  • Client profile People of age group between 29 to 75 years old and with an assessed valuation of $5,000,000 or more. Entrepreneur, Business owner and professional, having a hunger to keep capital while increasing the wealth transfer and possibly the tax-free retirement.
  • It will help you to acquire the required cover without dissolving other assets.
  • One of its main benefits is that it will evade the cost of opportunitywhich we have to pay out of the pocket. The client can use the money of others and can reserve and retain a significant portion of their capital.
  • Premium Financing is mostly fair and transparent to the issuers or companies. Brokers convey the finished premium finance agreement directly to the company providing premium financing, and the holder of the policy will be billed as they would bill for any other insurance policy.

The risk in premium financing:

  • Interest rate and earning risks: the two compelling risks are interest rate and earning. If the interest rate on the loan amount rises quickly then the insurance’s earning will not successfully meet the expectations. And the policyholder is ended up with paying more money for the policy. Also, remember long period outstanding loan can create a larger risk. Some loans create risks as they allow to accumulate interest. Which grows quicker than the insurance’s value. So it is always advised for the payment of the current interest with an annual contribution.
  • Renewal risk: Another problem rise in health insurance financing is, renewability. Most of the premiums finances require renewability periodically and refinancing too. Hence, there is a small amount of risk of refinancing the policy and all of the loans that are the premium in nature have less time span terms which are lesser than the policy life.
  • Risk of the crediting rate: The credit rate is chosen by the carriers. The current rates of crediting aren’t at all guaranteed. The illustrated discussion of the rates of interest between the loan amount and the rate of the policy crediting rate will be in existent in future.

Tip for the newbies in the market:

Most importantly you should know the monthly cost of the premium and know the deductible. It will be easy for you to budget the health isurance premiums cost and calculate the coverage.