What are the Factors Affecting Health Insurance Premium?

Demand for insurance products in India, especially health insurance, has improved drastically post-COVID-19. Coupled with regular healthcare inflation, if you've still not purchased health insurance for yourself, it may be about time now! We are going to discuss one of the most important aspects of any health insurance policy: the factors deciding its premium.

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      Top Factors Determining Your Health Insurance Premium

      A health insurance premium is a cost you pay to the health insurance company for offering you financial protection during medical emergencies. This premium varies for every person depending on a number of factors. However, not all health insurance providers follow the same protocol while determining your premium cost. Take a look at some of the most common deciding factors of health insurance premium rates:

      • Pre-Existing Diseases

        PED are diseases that a person has been diagnosed, treated or consulted for within 48 months before purchasing a health policy. It will be considered a pre-existing disease if you have high BP or thyroid.

        The whole insurance sector work on risk assessment and probability. Naturally, people who already have some serious health concerns are more likely to face related health concerns later. The chances of raising claims thus increase for such people.

        In such cases, no insurer would take a risk willingly. In fact, most insurers don’t provide any coverage for pre-existing illnesses. However, to provide much-needed financial safety they will increase the cost of premiums for people suffering from pre-existing diseases. Chances are, your insurer will ask you to purchase an add-on cover for pre-existing disease.

      • Sum Insured

        Each policy has a different sum insured. This is the maximum amount you can claim from your insurer in case of a health emergency. Suppose the SI of your policy is Rs. 5 lakhs. In case of an emergency, if your hospitalisation bill is 7 lakhs then you can only claim Rs. 5 lakhs.

        The lower your SI is, the lower will be the premium. Health plans with a higher sum insured will cost more as you can claim much more from the insurer in case of a health emergency. It's always recommended to go for a higher sum insured as medical emergencies are unpredictable and you may end up paying out-of-pocket in case of something critical.

      • High BMI

        Body Mass Index or BMI is a common method to assess a person's fitness. A high BMI signifies a greater risk of facing health complications such as heart ailments, breathing issues, joint pains etc. If a customer has a high BMI, then they're seen as high-risk insurance purchasers who may develop health conditions sooner or later.

        The good news is, several health insurance providers also offer discounts and rewards for maintaining an active lifestyle, obesity control and other general wellness programs to encourage policyholders to stay healthy.

      • Age

        There's a reason our 20s and 30s are called the golden years of our lives. This is the age we're at peak health and don't have any significant health concerns. However, after this, we start developing health concerns and our bodies struggle to bounce back as they used to.

        If you buy health insurance early, it will cost less as there are fewer chances of your raising a claim. However, most insurers load the premium costs as you cross 45 years of age or more. In fact, most insurers don't issue plans to people above a certain age and roll out specific plans for seniors with higher premium costs.

      • Smoking

        Smoking is injurious to health and increases the risk of many health issues including lung issues, infertility, cancer etc. The chances of making a claim increase for smokers because of which insurers charge a higher premium for their health policies.

      • Miscellaneous Factors

        There are a lot of other factors that can affect your premium costs considerably. Make sure to focus on these factors before you buy any health plan.

        • Profession: Compared to regular office workers, those working at a factory or manufacturing unit may be required to pay a higher premium. Due to the higher risk of getting injured or sick, the insurer may increase their premium. Most insurers do not cover occupational hazards.
        • Type of Plan: Simple plans with few benefits will cost less premium, however comprehensive health insurance with extensive coverage or critical illness health plans will charge a higher premium.
        • Gender: Women and men have varying lifestyles and health issues to face. Some insurers may consider women as higher-risk policy buyers due to their health complications in later years. One such example is maternity expenses and other pregnancy-related claims that may be raised later.
        • Add-ons: Add-ons or optionals are extra benefits that you can use by paying an extra premium. They usually cover things that aren’t covered by regular health plans. The more add-ons you buy higher will be the premium.
        • Location: In India, different zones are distinguished based on geographic locations with varying elements like climate, pollution, quality of medical facilities etc. The premium will most likely be higher for Tier 1 cities as compared to Tier 2 and Tier 3 cities.
        • Family Size: Premium for individuals will be lesser for the same benefits as compared to a family floater. As the dependents increase on a plan, the health insurance premium will also increase.

      Health Insurance Premium: Things to Know

      Many people sought financial refuge under mediclaim policies when the disastrous second wave hit the country. The pandemic along with ever-increasing healthcare costs in India has finally convinced a lot of Indians to lean on health insurance. If you’re planning to buy a health plan and need more clarity about its cost, take a look at these quick health insurance premium facts:

      • Health insurance premium depends on several factors like age, previous health concerns, overall health, etc.
      • Your health plan premium is likely to change every year or with every renewal
      • You can pay lower premiums for health insurance thanks to NCB (no-claim bonus) on every claim-free year
      • You can get an estimate of your premium using a health insurance premium calculator online

      Over to You,

      It’s important to know how insurance premiums affect your choice of plan and your financial planning. Pick a plan with an affordable premium that you can pay annually (including standard inflation charges) so that you’re protected from all financial emergencies. Make sure to compare different health plans on Policybazaar.com before selecting the one that works best for you.

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      Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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