California Life and Health Insurance Practice Exam

Which factor does NOT influence the rates of medical insurance?

1. Age

2. Health status

3. Race

4. Geographical location

The correct answer is: Race

In determining the rates for medical insurance, several factors are considered, while some have a greater influence than others. Age is a significant factor because older individuals typically have higher health risks and may need more medical care, leading to higher premiums. Health status is also crucial, as those with pre-existing conditions or chronic illnesses usually face higher rates due to the expected cost of healthcare services. Geographical location plays a role because healthcare costs can vary significantly from one area to another, affecting the overall risk a health insurer takes on in a particular region. Race, however, does not influence medical insurance rates as it is not a legitimate risk factor for determining health risks or insurance costs. Insurance companies are prohibited from using race as a criterion for setting premiums due to anti-discrimination laws, ensuring that individuals are treated fairly regardless of their race. This focus on non-discriminatory practices aligns with the principles of equal access to healthcare services and prevents racial profiling in the pricing of health insurance.