Your Thoughts and Questions Answered

Summer 2001 CSANews Issue 39  |  Posted date : Mar 09, 2007.Back to list

I recently received a very thoughtful letter from a retired actuary who had worked for many years in the Canadian insurance industry. He made several points which I thought might be of interest to our readers. He obviously is asked by his snowbird friends to comment on the many travel insurance plans, and his letter is a collection of the various questions they raise.

In comparing plans, his friends wondered why Medipac does not have rates for 92, 122 or 152 days, to allow for travel time to and from their winter destinations like some other plans. From our surveys, Medipac has found that most snowbirds drive to their destinations and usually take about three days to travel in each direction. Very early on, we introduced rate structures that added six days to the normal monthly stays to allow for these travel days. Several other companies followed our lead but, instead, added two or three extra days. This allowed them to charge lower prices and made them appear more competitive with Medipac. Our extra six days have proven to be the correct number, as a very large proportion of our policies are issued for these extended durations.

Several people also thought that a calendar would be helpful in our insurance guide. We do include a daily rate calculator, but the calendar is actually a very good idea. I would like to know the day on which October 17th falls in order to better make my own plans. I will look into adding a suitable calendar for the main season launch.

Our actuary pointed out that one or two plans offer lower rates than Medipac's, for healthy people. This is definitely true. This can also be very expensive. We have generally found that these low-rate plans provide little coverage and can apply onerous conditions when it is time to make your claim. A recent claim, which was denied by one of these plans, was for an incident of pneumonia. The person involved had had a bronchitis drug prescribed more than 12 years earlier for a bad cold and this was used as the basis for denying the claim. That, of course, is exactly what their policy said. In this case, they paid the premium AND paid the claim. One of the other tricks used to get a low premium is to provide coverage for everything else but the condition which you have. A very unwise choice of plans, in our opinion.

Another method of keeping premiums low is to insist upon extensive periods of medical stability to qualify for benefits. It is not uncommon for a plan to require a five-year "stable and controlled" clause before benefits will be payable, and I have seen at least one plan that requires "stable and controlled" for 10 years. This means that any drug you are taking must not have had any change in dosage, either upward or downward, during this extended period. This is indeed rare and very, very few people can meet these criteria. Another factor is simply the fact that most people cannot remember if their drug dosage has changed over such a long period of time, I certainly could not. Most doctors' records are very complete in these areas and, believe me, the insurance company will find any such change when a $300,000US claim is "on the line." Medipac's stability period is a very reasonable 90 days for our snowbird program ­ Easy to qualify, easy to remember.

One clause that I really dislike, which is often used to get a low premium, is the one that will deny a claim for any sickness or injury that is caused "either directly or indirectly" by a condition for which you are taking a medication. The plan often doesn't say that, specifically. The policy wording will talk about Treatment, not Medication, but when you look at the policy definitions you find that Treatment includes the taking of any medication. And what does "indirectly" mean, anyway? If I am taking a cholesterol medication, does that mean that a chest pain or heart problem is not covered? These conditions (high cholesterol and heart problems) are certainly related and probably "directly" related, as opposed to "indirectly" related. The payment of your claim may be in jeopardy. We all love low premiums but please, please be careful when comparing different plans and be especially careful when considering the low-cost plans. They are low for a reason.

The last point I would like to address is the timing of rate increases. Now that our Early Bird offer is complete, we will be increasing our prices. We collect premiums in Canadian dollars and pay claims, usually, in US dollars. We had hoped that the Canadian dollar would remain stable over the year but, instead, it dropped from $0.69 to $0.65. This by itself creates a rate increase of more than six per cent. The costs of US health care, especially the cost of new high-tech drugs, is skyrocketing. In order to provide you with the best care, we must also provide the best treatments and medications. This means "new" and "expensive" and, unfortunately, higher rates. When we change our rates, other companies will follow very quickly as most of them are now not charging enough to cover their costs. Every year, one or two of them disappear ­ the snowbird travel insurance business is very challenging, to put it mildly.

One bright point on the horizon is our Canadian dollar. Many economists are now saying that it has reached its low point and can only improve from the ridiculous current levels. This bodes well for next year and I can only hope that most snowbirds will be able to maintain their chosen lifestyles through these expensive times.