How Are Health Insurance Premiums Determined?

The global pandemic has made us realize how essential it is to focus on health irrespective of what stage of life you are at. Even if you are in your 20’s or a parent or nearing retirement, health should be your prime focus. Maintaining an active lifestyle along with healthy eating habits is a good way to look after your health. However, even after such consistent efforts, there needs to be some form of backup plan to tackle unexpected medical emergencies. 

Health insurance plans are the perfect solution to have financial cover for these unpredictable medical exigencies and premium is the amount that is charged to ensure your health. But how are these premiums decided? Continue reading to know more – 

Age of the policyholder

Age is an obvious factor that impacts health insurance premiums. As your age increases, you become more prone to ailments, and thus the dependence of medical insurance increases. To compensate for this higher risk of ailments, the insurance premiums are charged higher for old age. This can be observed in the case of all health insurance policies wherein the premium goes on increasing as your age increases. 

Smoker or Non-smoker?

The next factor that determines your premium amount is whether you smoke or not. Since smoking and consumption of tobacco in any form increases the chances of fatal heart and pulmonary ailments including asthma and cancer, it significantly impacts the premium. While the popular myth is surrounded around smoking that no health cover is available for smokers, but instead, coverage is available with a caveat that it impacts your premium. If you happen to hide of your smoking habits and later the insurance company discovers about it, you claim may get rejected. 

Pre-existing diseases

Another critical factor that has a direct bearing on the premium amount are pre-existing ailments. Pre-existing diseases are those conditions that you are suffering at the time of policy purchase. If you have any such pre-existing conditions, the insurance company has to assume a higher risk. For that reason, the insurance company charges a higher premium to cover such ailments for which treatment is already sought. Some insurance companies may require a waiting period along with an additional levy of premium too.  

Type of insurance policy

Depending on the type of insurance cover, the premiums are accordingly charged. Along with it the features in the underlying insurance plan also determine how much premium is to be levied. For instance, an individual policy is more affordable than a family floater policy. Since the insurance company has to assume the risk for only one person in an individual plan, the premium is lower as compared to a family floater policy where the risk for all the beneficiaries is spread. Thus, you need to compare health insurance plans and weigh their benefits vis-à-vis their cost before finalizing your purchase. 

Geographical location

Lastly, the city where you reside is also one of the key determinants of your premium amount. A particular medical treatment may be expensive in a metro region whereas the same is cheaper in a non-metro place. Thus, based on your geographic location, the premium is accordingly priced. 

The different factors that impact your premium as listed above. While you look for a suitable policy, make use of health insurance premium calculator that not only helps compare the features but also helps to decide your purchase based on your budget. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. 

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