Does my credit get checked when I request a health insurance quote?

UPDATED: Mar 5, 2012

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Asked March 5, 2012

1 Answer

No matter what type of insurance you are purchasing, you can usually expect to have your credit score checked. Insurance companies do not check your credit history the way a lender will, but they do need to know whether or not you can be relied on to make your premiums and your credit score is the method they use. However, if you are purchasing your health insurance through a group plan, your credit score may not be reviewed, as group plans are intended to be available for anyone who belongs to the group.

Private health insurance, also called individual health insurance, may require you to undergo a medical examination as well as having your credit score checked. Private insurance is a lot stricter than group plans where health and ability to pay the premiums are concerned. In an employer-sponsored group plan, the premiums are automatically deducted from your paycheck, but individual plans will require you to make regular premium payments. Because there is a level of credit involved in such a system, your credit score will help the insurance company determine the level of risk to place you at, and the subsequent premiums you will have to pay.

Aside from the question of whether you can be depended on to make your premiums, health insurance is not concerned with your credit score. In group health plans, the group as a whole is a buffer against defaulting on premiums payments, but private insurance companies could suffer losses if they issued private health plans without first making sure that the insured person is a financially responsible person.

In cases where your credit score is checked, it is done so to ascertain your financial responsibility only. In other words, you will not be turned down for health insurance because you have a credit score lower than 650, but you may have to pay higher premiums. The increased cost is to offset the risk that you will be late or miss payments, not to penalize you for a low credit score. If your credit score subsequently rises, you can ask your insurance company to reassess the policy and perhaps qualify for lower rates at renewal time.

Answered March 5, 2012 by Anonymous

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