If you are someone that is unfortunate enough to live in a country that doesn’t offer free healthcare to all of its citizens, then you are probably familiar with the world of medical insurance. Medical insurance gives you the opportunity to cover medical bills that you may not have thought possible to overcome. However, if you look into it, the money that you put into your medical insurance really doesn’t add up with the estimated costs of your injury or illness.
Though this may seem confusing, it makes sense if you think about it. After all, what would be the point of insurance if you were still paying the full cost of the surgeries that you have? This means that your medical insurance is covering the rest of your bills. However, this begs another question. If medical insurance companies are only taking in a margin of what the medical bills actually cost, but are still paying the bills, then how do the companies make money?
Though this may seem confusing, you only need to meet someone that works in medical insurance to know that most medical firms are making plenty. Working in insurance is an extremely desirable job due to just how much money some of the bigger players in the sector are able to make every year.
How do they make money?
Insurance companies face no struggles when it comes to making money and there are in fact two primary streams of revenue for most insurance companies out there. These are known as investment income and underwriting income, but in the complicated world of insurance, it can be a difficult task to differentiate the two. Worry not, we have done the work for you.
Underwriting Income
Underwriting income may be the most popular way of making money that you may be familiar with in the world of medical insurance. If you have a healthcare policy, then you will know that you have to pay a monthly insurance premium. This is basically the set cost that you have to pay in order to have your medical bills continuously covered.
Premiums differ depending on the plan that you selected when you first joined your insurance company, yours may be more or less than the average depending on how much money that you spend every year. Unless you have an ongoing medical condition, it is unlikely that the insurance company will have to use your money to cover any medical costs for yourself and so this money is pooled. This pooled money is used in many ways. If you are under a medical firm then it is likely that your money will be pooled with others that haven’t required any medical attention that month. This money will be partly used to cover the medical bills of someone else under the same firm, but a lot of money will be leftover.
The law firm will use some of this remaining money for the general running of the business, and new laws mean that insurance firms need to spend at least 25% of their income on administrative costs, which are the costs for the general running of the business. So the profit for the business is assessed this way by adding up the premiums that are collected by the firm and taking away the costs of any expenses or claims that have been paid by the company.
Investment income
Something that you may not know about the world of business firms is that the money that isn’t spent on claims or other expenses is usually invested. They could leave the money as it is, but this usually means there is very little income left over. What the company chooses to invest the remaining money on really depends on a number of personal factors and insider knowledge that the firm owner may have. The usual ways in which this money is invested are through stocks and real estate as companies tend to try to avoid gambling the money that they make. This money is then given out as a wage.
Do the companies make a direct profit from customers?
As previously discussed, the money that you invest into your medical insurance usually never meets the overall costs. Because of this, it isn’t very common for medical insurance businesses to make a direct profit from customers, instead, they are required to use the money wisely.
Can you make a profit from medical insurance?
Though it is more common to work as a part of a firm, there is such a thing as independent brokers. These medical insurance brokers work independently and often charge higher premiums. These higher premiums mean that they are able to cover bigger medical bills, which makes them a favorable option for people who worry about medical issues.
If you want to get into the industry, it is actually relatively straightforward as all you need to do is find medical injury leads and work from there. If you need to purchase personal injury leads for sale there are plenty of online resources or independent companies that you can contact who will be happy to help you. However, there are certain laws you need to follow in order to run your business ethically. There are also a number of certifications that you need to earn in order to allow you to practice, but once you have that sorted out then you should be fine.
