Zone-Based Health Insurance

If you believe that your age, health condition and sum insured are the only factors affecting your health insurance premium, then think again. The city where you reside also plays a significant role in determining your mediclaim insurance cost. Metro cities fall in Zone 1, tier 1 cities are in Zone 2, while the rest of India falls in Zone 3. Know more about zone-based health insurance in this article.

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      What are Zones in Health Insurance?

      In health insurance, 'zones' refer to the classification of cities or regions based on the cost of medicare services. Health insurance companies in India use these zones to adjust premiums, reflecting the varying healthcare costs in each area. This helps ensure that customers in different cities pay a fair price for their health coverage.

      Zones in India are generally categorized as:

      Zone Cities/Regions
      Zone 1 Delhi/NCR and Mumbai, including Navi Mumbai, Thane, and Kalyan
      Zone 2 Hyderabad, Bengaluru, Kolkata, Ahmedabad, Chennai, and Pune
      Zone 3 All other cities and towns not included in Zone 1 and Zone 2

      NOTE: The classification of zones can vary between insurers.

      The advantage of zone-based pricing is that it can lower your premium by up to 10-20%. For instance, if you are 30 years old and living in Delhi (under Zone 1), you would have to spend ₹10,043 to buy a health plan with a sum insured of ₹10 lakh. However, if you buy the same plan in Agra (under Zone 3), the premium will come down to ₹8,995.

      How Does Zone-Based Classification Work in Health Insurance?

      Under zone-based health insurance, the premium often varies depending upon the zone of the policyholder. These zones reflect the cost of medical treatment in that area. As a result, premiums tend to be higher in zones where healthcare expenses are high.

      For example, Mansi, who lives in Meerut, holds an individual health insurance policy for which she pays an annual premium of ₹10,000. Meanwhile, Amrita, residing in Mumbai, has a similar mediclaim plan but pays a higher premium of ₹15,000.

      The primary reason for this difference lies in the zone classification of their respective cities. Meerut falls under a zone with lower healthcare costs, whereas Mumbai, being a metropolitan city, is categorized under a zone where medical treatment costs are significantly higher. As a result, the insurance premiums in both these cities are adjusted accordingly to reflect these differences.

      What Happens if a Person Moves from One Zone to Another?

      These days, people frequently relocate to different cities for personal or professional reasons. So, if policyholders move from one zone to another, their mediclaim insurance premium might change depending upon the zone to which they are relocating.

      If the policyholder changes his residence address from a metro to a small city, the same has to be informed to the insurer so that appropriate zone pricing can be worked out. There will be an endorsement and the insured can take a complete refund.

      On the other hand, many people prefer accessing healthcare facilities in metropolitan cities, given the advanced infrastructure and specialised medical services. So, if a policyholder shifts to a small city but wants to continue receiving treatment in a metro city, he can opt for it by paying an extra premium to account for the higher healthcare costs in metro cities.

      For example, Ravi purchased a health insurance policy while living in Kolkata. Later, he got a new job and decided to move to Delhi. To align his policy with the higher medical costs in Delhi, Ravi's zone will be upgraded, and he will have to pay an additional premium. On the other side, if Ravi had moved from Delhi to Kolkata, he could be eligible for a premium reduction as it would be a case of zone downgrade, and his new premium would reflect the lower healthcare cost in the city.

      Moreover, it is important to note that some health insurance companies restrict coverage if a policyholder moves from a Zone 3 city to a Zone 1 city for advanced treatment. For instance, if a person with Zone 3 coverage moves to Zone 1, he will get 80% of the claim amount because some policies insert a co-payment clause for undergoing treatment in bigger cities. However, the quantum of restriction varies from policy to policy.

      FAQs

      • Q1. What is a Zone in a health insurance policy?

        Ans: A zone in a health insurance policy refers to a geographical area categorized on the basis of healthcare costs in that region.
      • Q2. What is Zone-based pricing?

        Ans: Zone-based pricing means the cost of your health insurance premium depends on the zone you live in. Insurers charge higher premiums for zones with higher medical expenses and comparatively lower premiums for areas where healthcare costs are moderate.
      • Q3. What are Zone 1 and Zone 2 in health insurance?

        Ans: Zone 1 in health insurance includes cities like Delhi/NCR and Mumbai, including Navi Mumbai, Thane, and Kalyan, where healthcare costs are high. In contrast, Zone 2 covers cities where healthcare costs are moderate, such as Hyderabad, Bengaluru, Kolkata, Ahmedabad, Chennai, and Pune.
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      Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

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      *₹400/month is the starting price for ₹ 5 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

      *₹541/month is the starting price for ₹ 10 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

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      *₹390/month (₹13 per day) is starting price for 1 cr. Health insurance for 25 years old male, with pre-existing diseases, residing from tier 1 city rounded off to the nearest 10.

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