What are the factors affecting health insurance premiums?

Did you know paying health insurance premiums can help you get tax benefits in India? Under Section 80D of the Income Tax Act, you can avail of benefits of up to ₹1 lakh.

Health Insurance Premiums: Factors Affecting It

Premium is the amount you pay in return for health insurance benefits. The premium is usually paid annually to the health insurance provider. You may have seen that the premium differs from one policy/insurer to another. The factors that decide the premium of a health insurance policy can be:

1. Your Age
   A common understanding is that older adults are more vulnerable to health problems than younger ones. The older you are, the higher the premium you may have to pay.
   
   So, do not wait until you cross a certain age to purchase health insurance. Since health issues can occur to anyone at any stage, it is always best to purchase health insurance as early as you can. Also, at a young age, you are most likely to be eligible for a more comprehensive health insurance plan. Buying early may also make it easier to serve the mandatory waiting periods that come with most age-related illnesses.
   
2. Medical History and PED
   People with a history of repetitive sickness or hospitalisation are likely to pay a higher premium amount. That's because such a medical history points towards poor health and presents you as a risky candidate. Also, people with pre-existing diseases (PED) may have to pay a high premium. Common pre-existing illnesses include diabetes, thyroid, hypertension, etc.
   
   Tip: Make sure to be honest and transparent about your health condition to avoid any misunderstanding or termination of policy in the future.
   
3. Lifestyle Habits
   Your lifestyle and certain habits can also impact the premium of health insurance plans. For instance, people who consume alcohol or smoke are highly likely to have poor health. So, the chances of getting sick are also high. As a result, the premiums charged in such cases are higher than the health insurance premiums of a non-smoker.
   
4. Body Mass Index (BMI) of the Insured
   The BMI or Body Mass Index can play a crucial role in deciding your health condition. Those who fall under the category of high or low BMI are likely to be weak, unhealthy and more prone to illnesses. So, in such cases, your health insurance provider may charge a higher premium.
   
   Did you know people with high or low BMI are at risk of type 2 diabetes, hypertension, and even cancer?
   
5. Occupation
   The nature of your work also affects your health insurance premium. Yes, certain work environments can be risky for your health. For instance, people working at mines or construction sites are at higher risk of health hazards. So, the premium in such cases may be higher.
   
6. Your Location
   Yes, you read that right! This is because the residential location of an individual also impacts their health. For instance, people living in areas with hazardous levels of air pollution or where the chances of natural calamity are higher may have to pay a higher premium. However, depending on the health insurance provider you choose, this may or may not be a factor of consideration.
   
7. Sum Insured Amount
   The sum insured amount you choose directly affects the premium. The higher the sum insured amount you choose, the higher will be the premium. While deciding the sum insured, make sure to carefully decide the amount by taking into calculation your health status and budget for the premium.
   
8. Deductibles
   Deductibles refer to the part of the claim that the policyholder agrees to pay. For instance, suppose you choose ₹5,000 as deductible. If you raise a health insurance claim of ₹25,000, your insurer will pay ₹20,000 while you will have to pay ₹5,000.
   
   So, the higher the deductible you choose, the lower the premium. However, make sure not to choose a much higher deductible, especially if you are frequent with your hospital trips, as you may end up paying a larger amount when a medical requirement occurs.
   
9. Type of Policy
   There are different types of health insurance policies available. You may choose one that fits your requirements. The kind of policy you choose decides the premium payable. For instance, an individual health insurance plan may have lower premiums than a family health insurance plan. However, when you calculate the cost per family member, family health insurance can be cheaper.
   
10. Add-ons
    Last but not least, you may also purchase add-ons along with the basic health insurance plan. It helps you get more comprehensive coverage and better financial coverage. However, with each add-on you purchase, the premium also increases. So, make sure to choose add-ons wisely.

Also Read - How Age Impacts Health Insurance Premiums

Conclusion

Understanding how health insurance premiums are calculated can help you make better choices. Your age, gender, residential location, smoking habits, etc., can all impact the premiums. Young people with healthy BMI and no smoking habit can expect a relatively lower premium than those with obesity or smoking habits.

Before you purchase a plan, make sure to compare a few. It helps you pick the best one in your budget. At Jio Insurance Broking, you can compare various health insurance plans available to choose the most suitable one for yourself or your family!