How is Your Health Insurance Premium Determined?

How is Health Insurance Premium Calculated in India?

Most health insurance companies in India have their own set parameters based on which they fix the quotation price. And, it is important to know that every insurer do the market research, compile the historical data and uses its own assumptions while calculating the health insurance premium.

You can use the health insurance premium calculator to get an estimation 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, number of family members to be covered in the health insurance policy, etc. to calculate the mediclaim premium price.

Here are some of the key reasons why you must use premium calculator available on websites like Policybazaar.com:

• It is easier to compare and evaluate different health insurance plans in a matter of no time
• It is both cost-effective and convenient to select the most suitable plan
• It gives you a fair idea of the health insurance premium for different policies
• You can select the most affordable and ideal policy
• It is the most economical and time-saving mode of making an informed purchase
• It saves you from the hassle of meeting agents. You can decide policy in a fair manner without feeling pressurised.

What Factors Determine Health Insurance Premium?

Below are some of the factors that are taken into consideration when calculating premium of health insurance plans:

1. Age and Gender

   The cost of medical insurance premiums tends to increase with the applicant's age. This is because, as individuals grow older, there is a higher probability of them filing a claim due to a health issue. Even women are charged a lesser premium compared to men, as they are statistically considered to pose a lower health risk. Moreover, people above the age of 40 years are charged with higher premium costs as they are more prone to lifestyle-related diseases and critical illnesses, further increasing the probability of claims.

2. Type of Health Insurance Policy

   Your health insurance premium is based on the type of plan that you buy. If you are buying critical illness insurance, the premium will be on a higher side. And if you buy an individual plan, its premium will vary from a family floater plan.

3. 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. A higher sum insured means more extensive coverage, but it also comes with a higher premium. You can choose a sum insured based on your needs, but remember, more coverage will cost more.

4. Geographic Location

   Your location also plays a key role in deciding your mediclaim insurance premium. Some insurers use geography-based pricing which means that 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.

5. Pre-existing Diseases

   Anyone with a pre-existing disease is more likely to file a claim. Though most of the mediclaim insurance policies cover pre-existing illnesses after a waiting period of 2 to 3 years, the certainty of filing a claim is always more. For this reason, health insurers consider it a costly affair.

   Therefore, for applicants with blood pressure, thyroid, and diabetes, the medical insurance premium is always high. That is why it is advisable to buy health insurance at a young age.

6. Family 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 there are certain diseases that run in your family and if you are vulnerable to such health risks. To evaluate this risk, insurers may ask for detailed medical history and, in some cases, require a pre-policy medical test. While some insurers mandate these screenings only for applicants in certain age groups, others require them for everyone, regardless of age.

   For instance, if anyone in your family has thyroid or diabetes then they become vulnerable to various other health problems. Therefore, the health insurance premium for them will be more than someone with a clean medical history.

7. Lifestyle

   If you smoke regularly or consume alcohol on a daily basis your insurer can deny you a health insurance cover. However, there are some medical insurance providers that would cover such risk but the same would be compensated with a higher premium cost.

   The ill-effects of alcohol consumption and tobacco consumption last longer. For this reason, people who give up alcohol, are also vulnerable to consequent diseases and are more likely to file a health claim. Therefore, insures charge them higher premium or deny coverage as they are more likely to develop critical illnesses such as cancer, kidney failure etc.

8. Riders/Add-ons

   Riders are optional extra benefits that you can include in your health insurance plan for added protection. So, if you choose to add riders or add-ons to your base policy, you will have to pay extra premium for the same. So, the more add-ons you select, the higher your overall cost will be.