An Attained-age policy is one in which the premiums are based on your age at enrollment. The prices will be lower when you first enroll but may increase as you get older. There are three primary methods that insurance companies use to price their Medigap plans. These are attained-age ratings, issue-age ratings, and community ratings.
Attained-Age Medigap Policies
An Attained-age rating is probably the most common pricing method in the United States. The monthly premiums for these policies will be based on your current age at policy start. The rates will increase slowly over time.
Don’t let that scare you. All Medigap policies have rate increases to keep up with inflation. For the most part, they are generally quite reasonable since most increases must first be approved by the Department of Insurance. Also, because attained-age rated policies are so common, they represent the biggest group of insured policyholders. This helps to minimize and spread the insurance risk out over many people, thereby keeping pricing on these policies competitive.
Community-Rated and Issue-Age Rated Policies
The other two methods of pricing are less common. Community-rated policies generally offer rates based on geographical factors, such as which zip code you live in or whether you use tobacco. In other words, they don’t base rates on just age alone.
Issue-age rated policies are somewhat less common. In theory, when you buy an issue-age rated policy, the carrier will always price you at the age at which you bought the policy. While this idea seems alluring, these policies (depending on your state) will often have much higher premiums to start out. People who buy them don’t realize that the policy is still subject to annual rate increases to keep up with inflation. Be wary of any agent who tries to mislead you into believing that buying an issue-age rated policy means you will never have an increase in premiums. That simply isn’t the case.
If you are considering an issue-age policy, give us a call. We can check how your state typically rate its policies. We’ll also tell you whether these are a good buy where you live, or if you should pursue another alternative that’s a better bet for long-term rate stability.
Compare Attained-Age vs Issue-Age
You need several pieces of information to choose the most suitable Medigap policy. Of course, you should review the current rates offered by the carrier. However, be sure you also check the carrier’s rate increase trends over the last five years and its financial ratings.
Would you like a free report that shows the difference in pricing for both attained-age and issue-age Medigap policies? We can provide one for you! Get what you need to make an informed decision about your choice of Medigap company. Request your free Medigap rate report today for help!