What are the Factors Affecting Health Insurance Premiums?

10 Factors Affecting Your Health Insurance Premiums

Health insurance premiums vary for every person depending on a number of factors that assess the risk and potential cost to the company. Take a look at the 10 most common factors that affect the premium of a health insurance policy:

1. Age of the Insured

   Age is the most important factor that impacts your health insurance premiums. The higher is your age, the higher will be your medical insurance premium. This is because as we age, we start developing age-related health issues like hypertension, diabetes, arthritis, etc. Since senior citizens are more likely to file a claim, their premiums are usually high.

   But if you buy health insurance at an early age, i.e. in your 20s and 30s, you have fewer chances of raising a claim.

2. Location/City

   The location/city where you live determines the premium of your health insurance policy. This is because the cost of healthcare facilities varies in different cities. Since medical facilities are most costly in tier-1 cities, the premium of a mediclaim policy will be higher for people living in tier-1 cities compared to Tier-2 and Tier-3 cities. Hence, people from Delhi will pay a higher medical insurance premium than those living in Jaipur.

3. Pre-Existing Diseases/ Medical History

   Your pre-existing diseases (PED) or medical history has a major impact on your medical insurance premiums. PED are the diseases you have been already diagnosed, treated or consulted for up to 48 months before purchasing a health policy. If you already have existing health conditions, like high BP, diabetes or thyroid, then you are more likely to raise a claim. This increases the liability of the insurance company.

   Hence, insurance companies charge a higher premium to people suffering from pre-existing diseases and cover such illnesses after a waiting period of up to 3 years.

4. Sum Insured

   The sum insured of a medical insurance policy also affects its premium. It is the maximum amount you can claim from your health insurer in case of a medical emergency. The lower is the sum insured of your policy, the lower will be the premium. A higher sum insured will provide wider coverage but will also increase the cost of the policy. Therefore, you must assess your health needs and pick a sum insured amount that provides sufficient coverage for a pocket-friendly premium.

5. Lifestyle Habits

   Your lifestyle habits also adversely affect the premium of your mediclain policy. Lifestyle habits, such as smoking, drinking alcohol, etc., are injurious to health and increase the risk of many health issues, including lung cancer, liver failure, infertility, etc. As a result, the chances of filing a claim are higher if you are a regular drinker or chain smoker. Therefore, insurers charge a higher premium to people with poor lifestyle habits like smoking and drinking.

6. Type of Plan

   The type of health insurance plan you buy also determines its premium. Basic health plans with few benefits will cost less than comprehensive health insurance with extensive coverage. Similarly, premiums for individual health insurance plans are lower compared to family floater health insurance plans. Besides, the higher is the number of family members covered in a policy, the higher will be the insurance premiums.

7. Gender

   Your gender also has an impact on your mediclaim policy premiums. This is because women and men have varying lifestyles and health issues and thus, they have a varying likelihood of raising a health insurance claim. Statistically speaking, men are usually charged a higher insurance premium as they are prone to heart diseases, smoking, etc. compared to women. Similarly, insurers may charge a higher premium to women in their 20s and 30s, as they are more likely to incur maternity expenses and file pregnancy-related claims.

8. BMI

   Some health insurance companies also consider BMI or Body Mass Index while deciding the premium of a policy. BMI is a common method of assessing a person's fitness. A high BMI signifies you are either overweight or obese and at a greater risk of facing health complications, such as heart ailments, joint pains, hypertension, etc. Since you are more likely to file a claim if you have a high BMI, insurers will charge you a higher premium.

   On the contrary, several insurers also offer health insurance discounts on renewal premiums as a reward for maintaining an active and healthy lifestyle, thereby encouraging you to stay healthy.

9. No Claim Bonus

   The No Claim Bonus (NCB) earned on your health insurance policy also impacts your premium. NCB is a renewal premium discount your insurer rewards you with for not raising a claim during the policy year. The higher is your NCB percentage, the lower your premiums will be after the discount. Hence, you should file a claim only when you cannot afford the medical bills to earn NCB.

10. Riders/Add-on Covers

    Riders and add-on covers also affect the premium of your mediclaim policy. Health insurance riders or add-ons are extra benefits that you can use to expand your policy coverage by paying an additional premium. The more number of add-ons/riders you buy, the higher your policy premium will be.

Apart from the above-listed factors, health insurance premiums also depend on medical inflation, insurer competition and regulatory mandates.

Things to Know About Health Insurance Premiums

Take a look at a few things you should know about your health insurance premiums:

• Health insurance premiums are determined based on several factors like age, previous health issues, sum insured, location, etc.
• Your health plan premium is likely to change every few years due to your increasing age.
• You can lower your medical insurance premiums by earning NCB on every claim-free year.
• You can get an estimated premium for your mediclaim policy using a health insurance premium calculator online on Policybazaar.com

How to Lower Your Health insurance Premiums?

Check out a few ways to lower your health insurance premiums:

• Maintain a healthy lifestyle involving a balanced diet and regular physical activities
• Avoid smoking and reduce the consumption of excessive alcohol
• Choose a mediclaim policy with a higher deductible
• Avoid raising a claim frequently to build your NCB
• Review your coverage and alter your sum insured as per your health needs
• Compare different health plans online on Policybazaar.com based on coverage and premiums to select a plan that best works for you.