Understanding benefit plan premiumsHow providers calculate costs, paymentsBy Susan SIngh06/17/2002|CHRR, Guide to Pensions & Benefits|Last Updated: 06/20/2002 The financial and rating aspects of employee benefits can be a mystery to anyone outside the insurance industry. Thousands of dollars of life insurance can cost pennies a month, while dental coverage seems to cost about the same as one visit to the dentist.Setting premiumsIn group insurance programs, premiums are based on a combination of the chosen plan design, past utilization and the characteristics of the plan sponsor’s workforce (such as age, occupational risk). For life insurance coverage or for employers with a small workforce, the insurer may use the results of its entire block or “pool” of business in the analysis because of the relatively low incidence, and therefore the unpredictability of these claims. Life insurance premiums do not therefore necessarily equate to the paid claims from one plan. To Read the Full Story, Subscribe or Sign In Remember Me Forgot Password If you are a current Subscriber, please click here to set-up or update your login information.