Can someone please explain the difference between a Insurance Certificate and a Insurance Policy. I'm In the process of looking into Royal Neighbors, and noticed they offer a Certificate of Insurance. While the other companies I have inquired with offer a Insurance Policy. Any help on this clarification would be greatly appreciated. Also Any feedback one may have on Royal Neighbors would also be appreicated.
Difference Between a Insurance Policy and a Insurance Certificate
- Thread starter betbig
- Start date
- 9,744
An insurance certificate means that technically you have some sort of group coverage, which generally affords less protection to the insured than an individual policy.
What???
They are both contracts and deliver exactly the same benefits in all circumstances. A contract is a contract. Written on a group, fraternal, or individual basis makes NO difference.
- 9,744
Sorry bub, you've got some boning up to do.
Here's an example:
Here in Florida, some health carriers use "association group coverage" for their individual offerings. You get a certificate.
These policies are NOT regulated by Florida Statutes, and in addition, premiums can be raised without filing/permission of the DOI, unlike Florida-filed policies.
Try again.
- 14,808
Certificates are filed in some random state - normally a state with easy regulations. Certificates mainly apply to association-group policies and filing this way makes it very easy to implement new plan designs and also put in all kinds of "odd" features in the plans...which those carriers refer to as "flexibility." Although each state's DOI has to approve the plans, they don't need to be filed in each state which is time-consuming and expensive.
A policy has to be filed in each state. It's time-consuming and difficult to change. Because of that those plans typically don't have as much flexibility.
Now - we get into "innuendo" and things I have simply heard but cannot confirm. Policies must conform with each state's set of mandates and the DOI must approved rate increases. They also apparently offer more DOI protection.
Certifications do not have to include all the state's mandates, however apparently there are some mandates even carriers filing certificates can't get around. They also apparently offer less consumer protection since rate increases don't have to be approved by the DOI.
In Fl for example, if you are getting a certificate there's a large warning from the DOI stating that you are giving up consumer protection.
A policy has to be filed in each state. It's time-consuming and difficult to change. Because of that those plans typically don't have as much flexibility.
Now - we get into "innuendo" and things I have simply heard but cannot confirm. Policies must conform with each state's set of mandates and the DOI must approved rate increases. They also apparently offer more DOI protection.
Certifications do not have to include all the state's mandates, however apparently there are some mandates even carriers filing certificates can't get around. They also apparently offer less consumer protection since rate increases don't have to be approved by the DOI.
In Fl for example, if you are getting a certificate there's a large warning from the DOI stating that you are giving up consumer protection.
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But... they are still the same contracts and offer the same BENEFITS. Therefore you don't get less insurance as you posted. The same CMS guidlines apply.
- 9,744
I beg to differ that a contract that has to have state DOI approval for a rate increase, and one that doesn't, is the "same contract".
Who said anything about CMS guidelines?
Who said anything about the Republic of Florida?
The OP asked about the differences in a policy and certificate as they pertain to Med Supps (I assume). He didn't mention what state he is in.
As far as asking for and not asking for rate increases... it's not often that a company doesn't get exactly what they want anyhow. They have to submit their claims/loss for the book in question to verify the rate increase. A company that doesn't will not take anymore than they NEED if they want to maintain market share. You're splitting hairs over a particular reg. in your state as if it applies to us all. Bottom line... a supplement is a supplement... policy or certificate.
And... by asking about a medicare supplement (again my assumption) he brought CMS into it. All supplement afford the same rights and protections.
- 17,222
Royal Neighbors, Knights of Columbas, Woodmen of the World etc. are member benefit societies. They are different from regular insurance companies and that is why they don't offer policies.
They started out as groups that the members would all pitch in and all pay a portion when one member had a loss. So if one member's house burnt down, all members would pitch in some money and buy him a new house.
They are still set up that way and that's why they don't have to participate in State Reinsurance funds. But they operate more like like a traditional insurance company today with level premiums etc.
I know a lot of agents as well as clients like the member benefit societies. I've asked my department of insurance about Royal Neighbors in particular because the whole concept made me uneasy. They said they are just as solid as any other company. No problems with them. Use the same AM Best info to judge their stablilty. Also said we agents shouldn't worry about the state reinsurance programs because we should never disclose that it exists or count on it.
I have not personally done any business with Royal Neighbors but I am appointed with them.
- 9,744
Just to be clear, are you talking about reinsurance, or a state guaranty fund? They're not the same thing....
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