Why can’t I buy health insurance like I can buy car insurance?

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Here's what you need to know...

  • Buying health insurance and car insurance are both alike and different
  • Both types of policies go through an underwriting process
  • The health insurance industry has much less uniformity than that of the car insurance industry

Wondering why you can’t buy health insurance just like you can buy car insurance? Car insurance and health insurance are similar and yet very different.

They are both insurance products whereby the consumer pays a premium in order to transfer the risk of a costly loss to a third party.

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The Standardization of Insurance Policies

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Health insurance used to be rather complicated to buy because there wasn’t  a standard health insurance policy that was required, unlike car insurance in most states. In the majority of American states, car insurance is required by law for all car owners.

A standard policy with at least the minimum amounts of coverage is needed. These liability amounts and coverage levels vary from state to state. There are even high-risk options for those who would otherwise be unable to be insured.

The health insurance industry has much less uniformity than that of the car insurance industry. While many health insurance policies are similar, they are not the same.

From company to company, you will find several differences between policies, making it difficult to compare them when you are shopping.

The lack of state and federal requirements for a standard policy means that insurance companies have more freedom in regards to limits, deductibles, and exclusions they choose.

Car insurance is much easier to compare and choose from because of the standardization.

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The Complexities of Risk

One important factor that makes it difficult to buy health insurance as easily as car insurance is the risk factor. Analyzing risk is much easier for car insurance because underwriters consider a very limited number of things.

Driving records, past insurance claims, demographics, credit scores, location and the type of vehicle are the typical factors considered when setting car insurance premiums. 

With health insurance, the factors that must be considered are practically endless. Prior health history, insurance history, family history, geography, demographics, present health condition and more are among the multi-faceted factors that must be investigated for health insurance.

In addition, correlations between certain of these factors and the actual risk they present for a person’s health change regularly depending on which study is being considered.

Another aspect of risk that differs for health insurance is that with car insurance, there is the likelihood that many policies will have no claims paid out during a given policy term.

The Variety of Options

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When you look at car insurance there are just a few options to consider. You must ensure that you comply with state minimum requirements. You will also need to decide on the amount of liability coverage to carry.

Whether or not to get extra coverage like comprehensive, collision, medical payments, uninsured motorist and more must also be decided. You will also need to look at the level of the deductibles on your policy.

Once you have made the decision of the type of coverage you want, the limits and the deductibles, it is very easy to compare car insurance quotes from different companies. However, it is not quite so easy with health insurance.

When you shop around for health insurance, you will find that there are differences everywhere. Individual plans usually differ from group plans.

Overall the plans that are available include:

  • HMO (Health Maintenance Organization)
  • PPO (Preferred Provider Organizations)
  • POS (Point of Service)
  • HDHP (High Deductible Health Plans)
  • HSA (Health Savings Accounts).

While these plans are carried by most health insurance companies, they vary so much in what they offer; the available deductibles, limits and exclusions, and how accessible they are, that it is very difficult to compare them.

Luckily, shopping for car insurance is a much less intense experience. With the help of an online search tool that finds the different options and presents them in an easy to use format, it can be done quickly and easily.

When you are ready to get started looking for an auto policy to fit your needs, check out the car insurance comparison tool. Enter your zip code below to get started now!

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