Home >Money >Personal Finance >Six factors that could impact your health insurance premiums
Each insurance company could take into account different parameters while underwriting which could also have a bearing on premiums. Photo: iStock
Each insurance company could take into account different parameters while underwriting which could also have a bearing on premiums. Photo: iStock

Six factors that could impact your health insurance premiums

  • Your age, gender and even the body mass index could affect the premium you pay for your health insurance policy

The fear around covid-19 and the constant rise in cases has pushed people to realize the importance of a health insurance cover. Insurers and online aggregators we spoke with said they have noticed a significant rise in demand for health insurance products ever since the pandemic set in.

If you’re still uninsured and finally want to take the plunge, understand that health insurance premiums could vary due to a host of factors such as age, your geographical location, pre-existing diseases, and the sum insured you opt for, among others. Also, each insurance company could take into account different parameters while underwriting which could also have a bearing on premiums.

Here are six factors that could affect how much you pay for your health insurance.

Age and gender

Age plays a key role in determining your health insurance premium. The older you get, the higher premium you pay because your chances of falling ill increases as you age. Older individuals are considered as high-risk customers by insurance companies.

“Health insurance premiums are based on the probability of you falling sick. Most insurers have age-wise bands to decide premiums and others apply a small yearly increment," said Naval Goel, CEO and founder, PolicyX, an online insurance aggregator.

A couple of insurers could also take gender into account while deciding premiums. Goel said in some cases, the premiums could be higher for men compared to women. “Men are more likely to go out for work and, hence, more likely to meet with accidents or fall sick. Drinking and smoking are the other factors which could expose men to higher chances of heart ailments."

Geographical location

The other important factor that could impact your health insurance premium is what part of the country you live in.

Gurdeep Singh Batra, head, retail underwriting, Bajaj Allianz General Insurance Co. Ltd, said some products have geography-based pricing. If you live in a metro city such as Delhi or Mumbai, you could be paying a higher premium compared to someone living in a tier II or tier III city. “The difference is because the cost of treatment is higher in a metro city as against a tier II or tier III city," said Batra.

Experts said the other reason for high premiums could also be the lifestyles of people living in metro cities which could make them vulnerable to health issues.

Sum insured and add-on covers

The sum insured you opt for has a direct impact on the premiums. The add-on cover that you pick could also affect the overall premium but the rise depends on the type of add-on.

However, increasing the sum insured a couple of years after buying the policy does not mean that your premium will go up proportionately. “As your sum insured increases, the chances of you using up the complete amount aren’t very high. Therefore, the premium never increases proportionately. There would only be an incremental increase. In general, if you paid 8,000 for a 5 lakh cover, then for a 10 lakh cover, you’d have to pay around 12,000," said Goel.

Body mass index

Body mass index (BMI) and lifestyle may not be considered upfront for premium calculation but if you’re underweight or obese, it could push the insurer to reconsider your proposal for buying a health policy.

Rakesh Goyal, director, Probus Insurance, an insurtech broking company, said people with higher BMI values have a higher risk of getting affected by ailments such as heart-related problems and diabetes, among others. Hence, the premium cost for such individuals could be higher compared to an individual with normal BMI.

“There’s an acceptable range in terms of BMI and if your BMI is very high, there are two possibilities. The insurer could either deny offering you a cover or come up with some amount of loading which will push up your premium," said Goel.

The insurance company could also negotiate with you by reducing the coverage where they’d exclude covering you for a few conditions while charging regular premium.

According to experts, the regulator is expected to come up with some amount of standardization on the BMI front.

Type of plan

The premium you pay could also depend on the type of plan you opt for. Typically, a family floater plan works out cheaper than an individual policy because the policy covers the entire family under the same sum insured.

For example, the premium you pay for buying two individual plans with a cover of 5 lakh each would be higher than what you pay for a floater plan with the same sum insured because the chances of both individuals falling sick is lower.

Note that the premium for a family floater plan is decided based on the age of the oldest member covered under the policy.

Family medical history

In some cases, individual or family medical history could also have a bearing on the premiums. Other than a mandatory waiting period for individuals with pre-existing conditions, the premium could be higher too because such individuals are more likely to get hospitalized and file a claim.

“A policy seeker with no ailments could end up paying less premium whereas a person with a medical history or any family medical history such as diabetes, cancer and blood pressure might have to pay comparatively higher premiums," said Goyal.

Batra said with standardized products from 1 October 2020, pre-existing diseases may not have any significant impact on premiums because by default policies will have to cover such diseases after the waiting period.

Unforeseen medical emergencies could create a huge dent in your finances, set you back by a few years or disrupt your finances completely. “While we have access to the best healthcare facilities, it comes at a cost. And we wouldn’t want to compromise on medical care which could make us stretch ourselves and put our future in jeopardy. Having health insurance ensures you have enough financial support during a medical emergency," said Shweta Jain, CEO and founder, Investography, a financial planning firm.

So buy a health insurance policy now if you don’t have it already.

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