Buying Dental Insurance information johndds com 562 869 0928 - YouTube

A dental "benefit" can be offered by an insurance company ONLY if the company makes a profit.

In order to make a profit, an insurance company has to ensure that the money they pay out

in benefits is far less than the amount they charge for insurance premiums.

If they pay out more than they take in, they go out of business.

If a person buys an individual dental insurance policy, the fact that the insurance company

must charge the buyer more than the policy will ever pay out is already factored into

the price.

On the average, the insurance policy buyer must pay about $100 in premium to obtain about

$75 - $80 in benefits.

The difference is the insurance company administrative costs and their business profit.

With this in mind -- with the individual paying $100 to an insurance company in order to obtain

$80 in dental care -- one has to ask, WHY buy dental insurance?

It is obviously cheaper to spend $80 directly at the dentist for $80 in care, than it is

to pay $100 to a dental insurance company to obtain that same $80 in dental care.

For an individual seeking to buy an individual dental "benefit," the cost structure obviously

makes no sense whatsoever.

Anyone who buys dental insurance assumes that the cost of the insurance is LESS than the

cost of their dental care.

Otherwise, there would be no reason to purchase the insurance.

Thus, the purchaser erroneously assumes that somebody ELSE will be paying the cost of their

dental care which exceeds the cost of the insurance.

With group dental insurance, policies are sold only to large groups and not to individuals.

Statistics show that with large group purchasers, many of the group do not even use their dental

insurance in the course of a year, despite the fact that the premiums are being fully

paid.

These people who do NOT utilize their group benefits may number 30% to 40% of the people

covered under the policy and are, in effect, paying the bills for all the people who DO

utilize the dental policy.

Since the premium is paid through payroll deduction or by the employer itself, the employees

often don't notice the full impact of their premium costs.

As opposed to group dental plans, individual dental insurance must be paid for by the individual

purchaser.

Nobody would go out of their way to find and pay for such a policy unless they intend to

use it!

Individual policies thus have a utilization rate of 100% as opposed to the 60% - 70% who

utilize group dental policies.

With individual policies, there is no "somebody else" who fails to utilize the policy, so

the individual has NOBODY ELSE to pay his bill for him.

This fact of high utilization rates for individual policies is called, in insurance terms, "adverse

selection."

When insurance companies know their policies are going to be subjected to "adverse selection,"

they must charge much higher premiums, or greatly limit benefits, or both.

Generally, dental insurance companies choose to avoid the severe problems of adverse selection

by avoiding the individual market entirely, restricting their dental policy sales to groups

only.

A few moments spent reflecting on the fact that dental insurance companies must collect

more money than they pay out, will help people who seek dental insurance to understand that

their premium payments MUST be higher than the value of the dental care they receive.

It is much more efficient, and cheaper, to seek out the best value among all the dentists

available and pay the dentist directly, cutting out the middleman (the "dental benefit company"

which performs no dental treatment at all), so the patient can pocket the savings.

For more information on Dental insurance visit us at www.johndds.com