Due to the rising cost of medical care, there has been a significant increase in people purchasing health insurance plans in recent years. In addition to covering you during difficult times, health insurance also provides tax benefits. Please note tax benefit is subject to change in prevailing tax laws.
Buying insurance from a reputed company would be best to give your family a financial cushion in an emergency.
Insurance companies typically evaluate the applicant’s health profile when approving an insurance application. Based on their review, they determine the premium rates. Other aspects also go into calculating the insurance premiums. Let’s take a look at those.
Every insurance company determines compensation costs according to a set of guidelines. The following factors are considered when determining the premium for medical insurance: Here are the ten aspects that affect health insurance premiums: Here are the 10 aspects that affect health insurance premiums:
1. Age: This is one of the most important factors influencing the premium amount. Insurance companies generally adhere to the rule of thumb that the older the insured, the higher the premium.
Older people can be at a greater risk of becoming ill than younger people. If you purchase health insurance when you are young, you will receive comprehensive coverage and superior benefits at an affordable cost.
2. Your medical history – Your past medical condition is crucial in determining the amount of your premium. Your premium will be higher if you have a history of illness or a pre-existing condition.
However, your premium would be lower if you don’t get ill often and have lived a relatively healthy life.
- Occupation: Your occupation and the risk you may be exposed to at work impact your premium costs. If you work in an environment with a high risk of injuries, such as a construction site or factory, your premium can be higher than in a school.
- Policy duration: Your policy’s period also plays an essential role. If you choose a longer-term approach, the premium would be lower. This may differ for policies with a shorter time.
- Body Mass Index (BMI): Customers with a high BMI have their premiums increased. People with a high BMI can be at risk for serious conditions like heart disease, type 2 diabetes, breathing difficulties, high blood pressure, and cancer.
- Smoking habits: According to a report published in the medical journal Lancet, India has approximately 11.2% of the world’s smokers. Tobacco use increases health risks; therefore, insurance companies view smokers as high-risk policyholders and charge them a high premium. Thus, in comparison to non-smokers, smokers pay higher premiums.
- Geographical location: Where you reside determines the cost of your insurance premium. Due to a shortage of healthy food options, unfavorable weather conditions, and the prevalence of health problems, the premium rates in certain regions would be typically high.
- Type of health insurance coverage you select: Premium payments vary based on your health insurance coverage. A group health insurance policy has a lower premium than an individual one.
Individual or group insurance premiums are low, whereas premiums for health insurance plans for family coverage (family floater) are high. Again, the terms of policies vary from company to company.
- Co-pay insurance option: If you opt for coinsurance when purchasing a health insurance policy, your premium can be lower. Coinsurance requires paying a portion of any claim, with the insurance company covering the remainder. This feature significantly reduces the premium amount.
- Add-ons purchased: The add-ons or riders you buy with your health insurance plan can increase your premium. Personalizing health insurance with selected covers that suit your needs attracts an additional premium.
* Standard T&C Apply
After considering these variables, the insurance company uses them as a metric to determine the final premium amount. You can use the Bajaj health insurance premium calculator online to estimate the premium you may have to shell out according to where you stand about the above factors.
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