An adjustment in premium ensures that your insurance cover retains its value, and doesn’t lose effect over the years.
Almost all insurance companies change premiums. Premium adjustment clauses are used in the insurance policy or the General Terms and Conditions of Insurance to change premiums.
In some cases the increased amount depends on a price index, which Statistics Austria publishes regularly. Other insurers work using a fixed percentage – for there to be no change is very seldom.
Why premium adjustments aren’t a bad thing:
There are advantages to increases in premiums:
- You remain covered:even if everything becomes more expensive, the insurance company will continue to pay the agreed coverage.
- No risk of being underinsured:the sum insured does not decrease in value. You remain adequately insured.
- Long-term stability:the insurer is still able to pay an insurance benefit in ten or twenty years time, without suddenly needing to make an additional payment.
Special case – health insurance
In the case of supplementary health insurance, the insurer’s options regarding the adjustment of premiums are clearly defined in the law. The premium shall only be allowed to increase under specific conditions, for example:
- the agreed price index increases,
- life expectancy increases,
- usage or cost of benefits increases,
- the relationship to benefits under social insurance changes,
- statutory or official charges increase or
- healthcare rules change.
When are they not allowed to increase?
The premium is not allowed to increase simply because you get older, get ill or make more frequent uses of benefits. Adjustments only apply from the following month after notification – they can’t be changed retroactively. You should changing insurer carefully, because
- the premium depends strongly on your age when concluding the contract,
- new medicals may lead to rejections, surcharges or exclusions,
- reserves for increasing age that have already been accrued are lost.
The premium is too high – what can you do about it?
- Object:with some insurers it is possible to continue to pay the same premium with reduced benefits.
- Change tariff:cancel additional benefits or change to a tariff with an excess payment.
- Short-term shortage of funds:Many insurers offer the possibility to defer or suspend coverage for a specific period of time. The premium decreases while coverage remains, and a fresh medical is not required, which is helpful in the event of unemployment, illness or stays abroad.
Summary
Premiums being adjusted are no reason for panic. They ensure that your insurance cover remains adequate in many years’ time, and that you will not suddenly find yourself underinsured in an emergency. If you understand when and why premiums increase or not, you can react wisely, save money and still remain fully covered. As ever, the following applies: compare different products and seek advice!
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Premium:
the price that an insurance policyholder is required to pay to the insurer for insurance cover.
Policy:
contract document between the insurance undertaking and the insurance policyholder.
Index:
depicts the performance of certain selected of instruments, for example shares, bonds or even commodities.
Scales of premiums:
The manner and way in which an insurer organises its cover and costs, and defines the package based on benefits and price.