Use caution when buying low-cost health insurance

NEW YORK CITY—The unstable economy is prompting many people to cut their living expenses, but consumers need to be careful when it comes to insurance, according to a warning from the State Insurance Department.
  While many health plans advertised on television and elsewhere sound appealing, they may provide consumers with little protection.
  “Consumers must keep in mind that if something seems too good to be true, it often is. Advertising that promises a certain percentage of savings, Internet pop-up ads, the term ‘guaranteed coverage’ and health plans that will not disclose a list of providers until after an individual signs up are all red flags. Buying insurance without fully researching it, or buying a policy based solely on price could leave a consumer without any legitimate coverage and that could be catastrophic,” State Insurance Department Acting Superintendent Kermitt Brooks said in a press release.
  The recent experience of a Rochester area woman demonstrates how consumers buying presumably low-cost insurance can end up facing huge debt.
  The woman purchased health insurance from a telemarketer and agreed to have the $419 per month premiums paid by automatic charges to her credit card. She was provided no written documents spelling out details of the coverage. Soon afterward, she needed hospitalization, which cost nearly $28,000. It turned out the policy, sold by an agent unlicensed in New York, covered only limited medical benefits and paid only $1,164 of the expenses.
  The best way for consumers to protect themselves is to understand the type and extent of coverage they need and consumers should always consider the products of several insurers before making a decision. Compare the coverages that are offered, identify what the policies exclude and compare premiums, said Mr. Brooks, who urged consumers to use these common-sense guidelines:
  *Access the Insurance Department’s website or call the Department to make sure the insurance company, broker or agent is authorized to do business in New York State.
  *Make sure that all of the blanks are filled in before signing any document and keep copies of anything signed. Also, keep all receipts and make sure receipts show the name of the agent or broker.
  *Contact the insurance company if an insurance identification card or a copy of the signed policy is not received in a timely manner. Failing to receive these documents could be an indication of insurance fraud.
  *Review the insurance policy again after receiving the signed copy from the insurance company to confirm that it is what was agreed on.
  *An insurance company, agent or broker should always be willing to fully answer questions. If they fail to do so, it should be a cause for concern.
  Consumers who suspect they have been victimized, or are aware of any instance of insurance fraud, are urged to call the Insurance Department’s toll-free fraud hotline, 1-888-FRAUDNY, immediately.
  The Insurance Department’s website, http://www.ins.state.ny.us [1], contains detailed information about all types of insurance. Consumers who require additional assistance should to speak with a representative of the Department’s Consumer Services Bureau between 9 a.m. and 4:30 p.m., Monday through Friday toll-free at 1-800-342-3736.

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