Quick Insurance Tips

Not properly coordinating the cancellation of your old medical insurance policy with the effective date of your new policy can cost you a lot of money and heartache.  Failing to do this properly can lead to your holding the bag for an uncovered expense or paying longer than you should for an unnecessary second policy.

If your new policy goes into effect after your old policy has ended, you expose yourself to the potential of having a major expense uncovered.  Also you expose yourself to the possibility of acquiring a pre-existing condition that makes you uninsurable.  If your old policy overlaps with your new one, you are paying unnecessarily for the second policy.

Ideally your new policy should go into effect the minute your old policy is terminated, but not a minute sooner.  This is not as hard to do as it sounds.

Individual health insurance companies will typically allow you to apply as early as two months before you need coverage.  This is true for most other lines of insurance.  If you complete a Missouri individual health insurance application or apply in any other state, you will probably be asked for the first month’s payment in advance.  However, since you are merely paying in advance, you are not really double paying.  You can expect the subsequent billing to start the second month of your new policy.  You will make up for paying in advance by skipping a month of paying.

What you want to happen is to find out that your new policy is approved at least a week before it is effective.  This way you can contact your old company and cancel the old policy before you get billed for the next month.

An insurance policy cancellation letter is typically what is required to terminate a policy.  Most companies will allow you to fax a signed request.  Although many companies will have a form that you can use, they are also likely to handwrite your request so long as it is dated, signed and includes your policy number and the date you want your coverage to end.  Most companies prefer that your request be faxed, although all will take your request by mail.  A few companies will allow you to cancel by phone.

If you have a health condition that might make it hard to find coverage, applying as early as possible may allows you to explore more than one option and find coverage before your deadline.

To avoid having a lapse in coverage, apply as early as possible, but request that your policy start at a later date.  This can help reduce the chance that you will be exposed to unnecessary risks because the new policy can’t be approved in time.  It also makes it easier to make sure that you don’t pay two different insurance companies for coverage for the same day.