10 Factors Affecting Your Health Premium Cost
People are becoming more prone to diseases today. With drastic lifestyle changes, especially in urban areas - having health insurance is becoming more and more important!
After the covid-19 pandemic hit, people have realized the importance of health insurance coverage and how it is crucial in times of medical emergency.
Well, nothing comes for free!
Buying health insurance means you have to pay the premiums! So, you must also know how the amount you pay as premium is influenced.
Below are some factors that affect the cost of health insurance premiums:
- Age: Age is one factor that influences the health of a person. In a usual scenario, health tends to deteriorate with age. Meaning, as you get older, you’re at a higher risk of catching a disease or falling ill. Hence, more likely to get hospitalized and incur medical expenses.
Health insurance has a generic thumb rule that says higher the age, higher the premium.
So, the premium for older people is more than that of the younger ones! - Medical History: Past medical history of both the policyholder and their direct family is responsible for the premium cost. If there’s a history of diabetes, heart disease, cancer etc. in the family then it’s likely that the premium will be higher than those who have a clean and healthy medical history.
- Sum Insured: Premium is also dependent on the sum insured amount that you opt for in your health policy. Higher the sum insured coverage amount, higher would be the premium cost.
- Pre-existing Illness: Having pre existing diseases or illnesses is another factor that determines premium. If you suffer from pre-existing medical conditions or disorders that have a long term effect on your health, then the cost of total hospital expenses is likely to be greater than that of a healthy person of the same age group.
- Type of Plan: The premium amount also varies according to the type of health policy plan chosen. The premium of a family floater plan tends to be lower than an individual policy as the chances of an individual falling sick is higher.
Point to note is, in a family floater plan the premium is dependent on the age of the eldest member of the pool. - BMI: Body Mass Index is a numeric indicator that classifies a person as underweight, normal, overweight and obese. High BMI (greater than 25) means falling into the overweight or obese category.
Individuals under these categories are more likely to catch diseases like diabetes, arthritis, breathing problems, heart ailments, hypertension, etc. and are therefore considered high-risk insurance buyers by health insurance companies. So, if you have a high BMI, you’ll have to pay a higher premium as there’s a higher chance of filing claims. - Nature of Work: The nature of your work and the amount of risk you’re exposed to at work also impacts the cost of your premium. For example, a person working at a construction or mining site is more likely to get injured than a person who’s teaching or working in an office.
More riskier occupation means higher premium. - Copayment: Having co payment clause in your policy means that at the time of claim, you will share the hospitalization cost with your insurer. Since you share the risk with your insurance provider, the premium cost for policies with copayment clause is less.
- Lifestyle: Unhealthy habits in your lifestyle impact your health. For example, smoking can impact your lungs and is likely to cause cancer. Hence, the premium paid by smokers is higher as compared to non-smokers.
- Location: Geographical locations vary in terms of cost of medical treatment, climate, pollution, etc. Cities in India have been divided into zones based on the medical cost there. Cities with higher medical costs mean higher premiums. So, where you live will also impact your premium amount.
It’s important to understand how your premium cost is affected by different factors as this also affects your choice of health insurance plan. Pick a health plan with an affordable premium amount so that you can continue to renew your policy and are not left vulnerable in times of medical emergencies.