How is Your Health Insurance Premium Determined?

How is Health Insurance Premium Calculated in India?

Health insurance premiums are calculated by assessing your health risks and how likely you are to raise a claim. Most health insurance companies in India have their own underwriting guidelines and parameters based on which they calculate your premium. These guidelines and parameters are formed by doing market research, compiling the historical data and using their own assumptions.

Which Factors Determine Health Insurance Premium?

Here are some of the factors that are considered when calculating the premium of health insurance plans:

1. Age

   Medical insurance premiums tend to increase with age. This is because, as you grow older, the probability of filing a claim due to a health issue increases. This is why people above the age of 50 years are charged with higher premiums, as they are more prone to lifestyle diseases and critical illnesses, further increasing the probability of claims. That is why it is advisable to buy health insurance at a young age.

2. Gender

   Your gender also impacts your health insurance premiums. Generally, women are charged a lesser premium compared to men, as they are statistically more prone to health conditions like stroke, heart diseases, hypertension, etc. Similarly, women end up paying a higher premium if they are in their 20s and 30s as they are more likely to file maternity claims.

3. Type of Health Insurance Policy

   Your health insurance premium is also based on the type of plan you buy. If you buy an individual plan, its premium will be lower than a family floater plan. Similarly, the premium of a critical illness insurance policy will vary from a regular health plan.

4. Sum Insured

   The sum insured is another factor that determines your health policy premium. It is the maximum amount your insurance provider will pay for your medical expenses in case of a claim. A higher sum insured means more extensive coverage, leading to a higher premium. You should choose a sum insured based on your health needs while keeping your budget in mind.

5. Geographic Location

   Your geographic location also plays a key role in deciding your mediclaim insurance premium. Some insurers use geography-based pricing. This means if you live in a metropolitan city like Mumbai, Delhi, or Bengaluru, your premium might be higher compared to someone living in a smaller town or tier-2 city. This is because medical treatment costs are higher in metro cities, and lifestyles in such areas are often linked to a greater risk of health problems.

6. Pre-existing Diseases (PED)

   Anyone with a pre-existing disease is more likely to file a claim. Though most mediclaim policies cover pre-existing illnesses after a waiting period of 1 to 3 years, the probability of filing a claim is always more than that of someone with no PED. For this reason, health insurers charge a higher premium to people with pre-existing diseases.

   Therefore, if you have high blood pressure, thyroid, or diabetes, your medical insurance premium will be high.

7. Family's Medical History

   Insurance companies often consider your family's medical history when determining the premium for your health insurance plan. The medical history is required to check if certain diseases run in your family and if you are vulnerable to any health risks. To evaluate this risk, insurers may also ask you to undergo a pre-policy medical test. While some insurers mandate these screenings only for applicants in certain age groups, others mandate it for everyone, regardless of age.

   For instance, if anyone in your family has thyroid or diabetes, then you have a high probability of suffering from it in future. Therefore, your health insurance premium will be more than someone with a clean medical history.

8. Lifestyle Habits

   If you smoke regularly or consume alcohol on a daily basis, your insurer can charge you a higher health insurance premium. Moreover, the ill effects of alcohol consumption and tobacco consumption last much longer. Hence, even if you give up alcohol or smoking, you are still vulnerable to its health consequences and are more likely to file a health claim.

   Therefore, insurers charge a higher premium to regular smokers or drinkers, as they are more likely to develop critical illnesses, such as cancer, kidney failure, etc.

9. Riders/Add-ons

   Health insurance riders are extra benefits you can include in your health insurance plan for added protection. But if you choose to add riders or add-ons to your mediclaim policy, you will have to pay an extra premium. The more add-ons you select, the higher your overall premium will be.

Can You Use a Health Insurance Premium Calculator to Determine Your Premium?

Yes, you can use a health insurance premium calculator on Policybazaar.com to get an estimate of how much premium you will need to pay for a health plan. The calculator will use a few basic details, such as your age, sum insured, city, number of family members to be covered, etc., to calculate the premium price.

Here are some of the key reasons why you must use a health insurance premium calculator to determine your premiums:

• It makes it easier to compare and evaluate different medical insurance plans.
• It is free of cost and convenient to use.
• It gives you a fair idea of the health insurance premiums for different policies.
• It helps you select the most affordable and ideal mediclaim policy.
• It is the quickest way of making an informed purchase.
• It saves you from the hassle of meeting agents. You can choose a health policy in a fair manner without feeling pressurised.