Ways Health Insurance Companies Can Use Advertising To Mess With You

UPDATED: Jul 17, 2023Fact Checked

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

UPDATED: Jul 17, 2023

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UPDATED: Jul 17, 2023Fact Checked

When shopping for health insurance, you are somewhat at the mercy of advertisements disseminated by insurance companies or their agents purporting to offer health coverage that will meet your specific needs. You should always be very skeptical of this advertising and, as quickly as possible, go beyond the advertising and any other supplemental materials to see the actual wording of the health insurance policy itself (the legal contract between you and the insurer). But until you can do that, you will have to deal with advertisements, other descriptive documents, and agent representations.

Here are some of the ways an insurer or agent can deceive you with their advertising:

  1. Omitting information or using words that have a tendency to mislead or deceive even if the prospective purchaser has the opportunity to review and return the policy. Insurance concepts and terminology are difficult for the layman to grasp. When an insurer adds to the confusion by omitting information or using deceptive words, you can wind up buying something different than what you thought you were buying. States have laws and regulations to help protect the public from this deceptive practice, but it is your responsibility to ask the insurer for a copy of the actual policy for review. The actual health insurance policy is the only legal document and that is what you must rely upon to determine your actual coverage.
  2. Using words such as “all”, “full”, “complete”, “comprehensive”, “unlimited”, “this policy will help pay your hospital and surgical bills” or similar words in a way that exaggerates policy benefits. It is wise for you, as the purchaser of new insurance, to immediately read the new policy to determine if the new policy actually provides the scope and type of coverage represented to you at the time of sale. Policies have a free-look period during which you, the purchaser, can return the policy if it is not what you thought it would be. Be sure to carefully read your new policy immediately after you receive it.
  3. Wording a policy limitation, exception or reduction in a positive manner to imply that it is a benefit, such as describing a waiting period as a “benefit builder” or stating “even pre-existing conditions are covered after two years.” If you are unsure what a term such as “benefit builder” means, ask for an explanation and don’t let up until you are fully satisfied that you know what your coverage is. Don’t allow yourself to be deceived by positive sounding words and phrases. Don’t buy the insurance if it is not clear to you what you’re buying.
  4. Using words such as “tax free”, “extra cash”, “extra income”, “extra pay” to mislead a prospective purchaser into believing that the policy advertised will enable the purchaser to make a profit from being hospitalized. This is a deceptive practice to characterize the insurance as something it is not. Insurers or insurance agents who advertise in this way should be avoided. Health insurance is designed to cover medical expenses, not to provide the insured with the opportunity to make a profit.
  5. Advertising a single disease policy to imply broader coverage. Read your policy when you get it to be sure you have the coverage you thought you were purchasing. All health policies have restrictions and limitations on coverage. Be sure you know what all of them are for your policy.
  6. Advertising a single disease without prominently displaying the limited nature of the policy with wording similar to the following: “THIS IS A LIMITED POLICY” or “THIS IS A CANCER ONLY POLICY.” Not every policy limitation or restriction must be so advertised. But for policies that have unusually limited or specific coverage, their limited nature must be highlighted.
  7. Advertising a policy sold by direct response as being “low cost” because no agent commission is involved when, in fact, there are substantial marketing costs for direct response selling. Be wary of any advertisement that suggests it is advertising low cost insurance. You get what you pay for. There are no exceptional low-cost deals when it comes to insurance. If the cost is low, the coverage must be very limited in some way. Make sure you know what those limitations are.
  8. Failing to show exceptions, reductions and limitations in coverage and waiting periods before coverage begins when showing the benefits. This is just plain deceptive. This type of advertising raises questions about the integrity of the insurance company and/or the agent. Know as you read an advertisement that there are limits to all coverage. So, if no limits are shown when discussing benefits, you know something is wrong. Ask for an explanation of the limits. If you are not satisfied, move on.

Case Studies: How Health Insurance Companies Manipulate Through Advertising

Case Study 1: Misleading Coverage Claims

In this case, a health insurance company advertises comprehensive coverage for a wide range of medical services, including specialist visits and prescription drugs. However, buried in the fine print, there are numerous exclusions and limitations that significantly restrict the coverage provided. This deceptive advertising tactic leads consumers to believe they have comprehensive coverage when, in reality, they may face significant out-of-pocket expenses for certain services.

Case Study 2: Unattainable Premiums

An insurance company promotes exceptionally low premiums in their advertisements, catching the attention of individuals seeking affordable health insurance. However, upon closer examination, the low premiums are only available to a select group of individuals, such as those with no pre-existing conditions or those who meet strict eligibility criteria. The majority of consumers, who may have pre-existing conditions or other health concerns, are not eligible for the advertised low premiums and end up facing significantly higher rates.

Case Study 3: Misrepresentation of Provider Networks

A health insurance company claims to have an extensive network of healthcare providers, ensuring access to quality care. However, when policyholders attempt to use their insurance, they discover that many healthcare providers listed in the network directory are not accepting new patients or do not accept the insurance plan. This deceptive advertising tactic misleads consumers into believing they have a wide choice of healthcare providers when, in reality, their options may be limited or non-existent.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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Enter your ZIP code below to compare cheap insurance rates.

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