There are several factors including age, lifestyle, smoking habits, etc. that affect the premium of a health insurance policy. For example, health insurance premium for an applicant aged 25 year will be different to that of an applicant aged 55-year. It is important to get acquainted with these factors beforehand.Listed below are some such factors that affect premium:
Age: As explained in the above example, age plays a crucial role in determining the premium of a health policy. As a rule of thumb, the premium amount keeps increasing according to the age of the policyholder. This means the younger you’re at the time of policy inception, the lesser premium you’ll need to pay. This is because younger people are typically healthier as compared to the older generation. Body Mass Index: It is yet another significant factor that decides the premium of a health insurance policy. Those who have Body Mass Index (BMI) at the higher side have higher chances of getting obesity-related medical conditions such as type 2 diabetes, high blood pressure, and high cholesterol levels. This is the reason why a high BMI results in higher premium rates for a health insurance plan. Medical History/Pre-Medical Conditions: Those suffering from some pre-existing medical condition are often required to pay higher premium as compared to those without any pre-exiting medical condition. In some cases, health insurers may deny providing coverage for particular illnesses. However, you should never hide your medical history from your intended insurance provider. Doing so may run you into trouble at the time of claim settlement/clearance process. Moreover, declaring your medical history will help you understand whether your insurance provider is taking your pre-existing disease in consideration or not at the time of policy inception. The Consumption of Tobacco: Smokers are often required to pay higher premium for the health insurance policy as against non-smokers. Consumption of tobacco related products or smoking exposes an individual to a greater health risk. In addition, health insurance companies also carefully consider the frequency of tobacco consumption or the intensity of smoking habit in order to determine the premium payment. Occupation of the Applicant: The premiums for health insurance policies are usually higher for those working in hazardous environment where exposure to chemicals, radiations, and hazardous substances is higher. In addition, the premium payment is also higher for those working at construction sites because the chances of bodily injury in such an occupation are higher against other occupations.
How to Calculate Health Insurance Premium
One of the major concerns that you may have is the calculation of premium. There are various factors that affect the premium of health insurance plans. You can calculate the cost of premium online using a health insurance premium calculator tool. Apart from the factors, there are certain guidelines that most of the insurers follow while calculating the premium.Following are the guidelines:
Cost of Marketing and Management: The cost of marketing and management are also recovered from your premiums. Under this section, the commission of the broker, marketing cost, expense of advertisement and other operating costs are covered. Underwritings of the Policy: Most of the health insurance companies deal with various health insurance plans like a family floater health plan, individual health policy, senior citizen plan, etc. The underwriting of all the policies is planned to maintain a balance among all these plans. Several policy risks are calculated and many factors are considered that can cause a problem at any specific time. Savings: Savings is that section of the health insurance premium which is put in various public investments. These investments are created according to the guidelines of the insurance regulatory body of India. Calculation of the premium is dependent on the returns of such capitalizations. Personal History: It entirely depends upon the health insurance provider to conduct body checkup before giving any health insurance plan. However, most of the insurance providers will likely to know about the personal habits of the insured such as smoking, drinking, etc. Mortality: The cost that the insurance provider has to bear in case of some eventuality with the insured. The cost of mortality that an insurer bears depends upon the age group and income group of the policyholder. Most of the times, it is higher for older policyholders.