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Jan 08, 2025
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Health Insurance Premium: How it is calculated?
Different health insurance plans have a different rate of premium. Most of you, therefore, wonder what the reason for the differentiating premium is. Well, the answer is simple. Premium rates of health insurance plans are calculated keeping in mind various factors. If the factors affecting the premium change, the premium rate also changes. Do you know what these factors are? You might not.
Factors Which Affect Health Insurance Pemiums and How is Premium Calculated:
1. Age of the insured:
Your age plays the most important role in calculation of your health insurance premium. At a higher age the chances of medical contingencies increase. As such, a higher premium is charged for older ages as compared to younger ages.
2. The coverage offered:
One of the primary reason why health insurance premiums vary across different plans is the coverage features offered. If the health plan offers a wide range of coverage features, the premium is higher compared to plans which offer limited coverage features. So, the premium is also calculated taking into consideration the coverage features of the plan.
3. The members covered:
If you cover more than one member under your health plan, the premium increases. This is because the insurance company takes on a higher risk of covering your family members too. That is why family floater plans are dearer than individual plans.
4. Sum insured chosen:
As the sum insured directly quantifies the risk which the insurance company is undertaking, it directly affects premium calculations. Premiums are calculated taking into consideration the sum insured you choose. The higher the sum insured the higher would be the premium charged and vice versa.
5. The coverage term:
Though health insurance plans are offered as annually renewable plans, you can choose a continuous term of two or three years by paying the aggregate premium at once. These long term coverage plans offer you attractive premium discounts. You can avail a discount of 5% to 15% by choosing a 2 or 3 year policy term. Thus, the term of the plan also helps in premium calculation.
6. Accumulated NCB discount:
NCB stands for No Claim Bonus. This bonus is offered if you do not make a claim in any policy year. Some plans offer a premium discount as NCB. So, if your policy allows a premium discount in case of not making a claim, you get a discount in your renewal premium. At the time of premium calculation, this NCB discount is used to lower the premium rate.
7. Other available discounts:
Besides the NCB discount, your health insurance plan might also allow other discounts. For instance, if you cover more than 2 or 3 family members you can get a premium discount, if you buy the policy online you can get a premium discount and so on. These discounts are also considered at the time of health insurance premium calculation to reduce the premium outgo and calculate the final premium rate.
8. Your medical quote:
The last factor which affects your health insurance quote is your medical history. If you have a history of medical ailments and illnesses, the premium would be increased for the higher health risk you present.
Health Insurance Premium: How it is calculated?
Health insurance providers evaluate your lifestyle, medical history, current conditions, and other similar characteristics before determining the premium cost. The majority of health insurance companies have their own specified criteria and base the quotation price on them.
Age, kind of coverage, amount of coverage, insurance history, and other characteristics all affect how much you pay for insurance.
Yes. The following options exist for lowering the health insurance premium of the chosen health insurance policy:
~ Purchasing the policy at a young age
~ Opting for deductibles or co-payment
~ Choosing top-up or super top-up health insurance plans
~ Choosing a health insurance policy as per your time zone
~ Checking for the No Claim Bonus (NCB) policy
~ Opting for family floater health insurance policies instead of individual health insurance policies.
Through aggregator websites, you can compare health insurance premiums, but make sure they include all insurers. Alternately, make a shortlist of three to five insurers and visit each one's website to determine the rate. Once you get the premium amounts from each insurer, compare them while maintaining consistency in the coverage and quantity insured.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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