Is individual dental insurance preferable to a discount dental plan?

Dental insurance contracts are often very benefit-rich on group insurance policies but not so on individual stand alone dental contracts.  For this reason, the 24-month  waiting periods we often see on individual dental contracts and the high rates of standalone dental insurance,  dental discount plans are often more advantageous for those who cannot get their dental insurance through an employer.

It is important to note the difference between standalone dental insurance policies and dental insurance that is acquired as a package with an individual or personal health care insurance policy.  Insurance companies almost always have better loss ratios when dental insurance is packaged with individual or family health care insurance policies.  This fact can make this an affordable way to make dental treatment affordable. 

It is more than the discounts that come when you buy in bulk that makes employer-sponsored dental insurance a better deal than standalone individual or personal dental insurance.  Although most people think that the buying power is the crucial reason for the difference in price, the most significant reason is based on the concept of adverse selection.  When an insurance company insures a large group of people at one company they usually get a their fair share of of insured people who will never use the policy at all.  When contracts are sold to individuals, they will disproportionately get policyholders who will use the insurance in a significant way.

Since so many people fail to shop around, the insurance companies continue to offer these policies even though they are usually over-priced and offer little value.  Consumers are getting more sophisticated. We are doing a lot or research online and may stop buying these policies at some point in the future.

Another reason that individual or personal dental insurance contracts tend to be a bad value when stacked up against discount dental plans is that there is usually a long wait before you may fully use your policy's benefits.  You may need to wait two or three years before anything major like a root canal is covered with an individual or personal dental insurance policy. 

What is more unfortunate than the elimination period itself is the policyholders' limited knowledge of the waiting period.  Since this information is hidden in the fine print, many consumers are unaware of the elimination period until they submit a claim.

Usually a dental discount plan will provide benefits right away or nearly right away so.  You may need to wait until the first of the following month, but no more.  This offers you a big advantage over most standalone individual or family dental insurance policies.

Although dental insurance may offer more benefits than a dental discount plan, you will probably overpay for those additional benefits if you purchase an standalone policy.  A dental discount plan is very cheap.  The annual cost is often equal to two monthly premiums for a dental insurance policy.

It pays to shop around and be aware of all your options when it comes to dental insurance and discount dental contracts.  Although group dental and dental insurance purchased as a rider on a health insurance policy may be a good value, dental discount plans will have significant advantages over individually purchased standalone dental insurance.