The insurance premium that you pay for the health insurance plan that protects your family is based on a compilation of statistical information and other data. The goal of the insurance company is to develop a probability analysis that describes the likelihood that you or a member of the family will make a health claim. Paying a claim is the last thing that your provider wants to do.

Even though a health insurance plan is in many ways a necessity rather than a choice, the companies that provide them do so because it is their business to do so. We would like to believe that there are more compassionate reasons but in reality, if an insurance company cannot make a profit from the insurance premiums that it receives, it will terminate the policy at the first legitimate opportunity. There are many issues that affect the cost to the company of providing insurance coverage to the policy holder. In most cases, those issues are identified before the health insurance plan is put into effect and the premium amount is largely determined by that information. Once in place, the premiums and coverage features will remain constant until renewal.

At the time of policy renewal, the provider will most, commonly, increase your premium to the maximum allowed by the laws of the state in which it was issued. Contrary to popular belief, making a health claim or two during the coverage term has little effect on what you will pay when the new policy goes into effect. The reason is that the vast majority of individual health insurance plans, which includes family plans, are entered into an insurance pool. The ability of the company to make a profit from its collected insurance premiums is based on averages as produced by the entire pool group; not of any individuals within that group. It is the job of the company to place its insured clients in the appropriate pool to best manage claims.

To be sure, if a policy holder makes an extraordinary number of claims during the term of his health insurance plan; if he makes numerous unnecessary doctors' office appointments or makes frequent visits to other ambulatory facilities, the provider will determine that it is not in its best interest to continue coverage. Simply put, as long as your carrier can make money with your policy as a part of its insurance pool, it will continue to offer coverage. If that becomes unlikely, the company will find a viable excuse to terminate that coverage. The most common reason that a particular policy becomes unprofitable is that the insured party negatively affects the cumulative numbers of the pool.