How are health insurance premiums calculated?

How are health insurance premiums calculated?

Some of the key factors that determine how health insurance premiums are calculated comprise the insured members’ age, gender, medical history, location, benefits, coverage or Sum Insured, and the optional cover preferences.

Before we delve into how health insurance premiums are calculated by insurance companies, let’s first understand how we personally calculate what to spend on health insurance premiums.

How much to spend on health insurance premiums?

Health insurance premiums are determined first and foremost by your personal profile. Your primary task is to set suitable coverage for yourself and your dependents. It helps to start early in life when you benefit from a lower premium. A Floater Health Insurance cover is beneficial, as it attracts a lower premium while covering dependents within your immediate family, or even your parents-in-law and other extended relatives.

Calculate health insurance premiums based on your family members’ age, gender, medical history, profession, lifestyle, and location. It would be best if you balanced your premium outgo with affordability. At the same time, ensure that the coverage is sufficient to secure your finances from medical emergencies. On an average, you should plan to pay around 2-4% of your annual household income as annual premium, and a higher amount if you or your dependents are elderly.

Factors influencing Health Insurance premium calculation:

One cannot do without suitable health insurance to cope with the unannounced arrival of medical emergencies. It is so relevant today due to the rapidly changing economic scene and triggering lifestyle habits impacting our health adversely.

A proper assessment of the plan’s overall offering is possible only when you are aware of the factors influencing premium payable, which are:

  • Age: It is presumed that you are healthier when young and rarely need to visit your doctor. Therefore, you benefit by paying a lower premium when you purchase a health insurance policy at a young age than when you are older.
  • Location: A metro city’s medical facilities are more expensive in comparison to smaller cities and rural areas. This in turn impacts the health insurance premium payable, which might be higher for residents of a metro city v/s a non-metro.
  • Medical History: Insurers seek information on any Pre-existing Diseases (PED), illnesses, conditions or surgeries undergone in the past, as it might indicate a tendency of taking ill more often in comparison to others. If applicants have a high-risk profile, insurers might levy a premium loading.
  • Lifestyle Habits: Regular use of tobacco products and consumption of alcohol might lead to more steep costs as a result of poor lifestyle choices. Insurers charge a higher premium, or might even decline your application, based on the extent of your indulgence in risky lifestyle habits.

Along with these factors, your health insurance premiums are influenced by customization of Health Insurance Plans by means of:

  • Add-on Riders or Optional Cover: Every insurer offers several riders to augment coverage for an additional premium. Choose your riders judiciously to keep the premium low.
  • Plan Category: It is sensible to buy a family health insurance to keep the premium affordable. You can choose a family plan with individual coverage, or a floater plan with a shared coverage, for a competitive premium.
  • Insurer:  Choosing the insurer is an important decision that can affect your health insurance experience. A higher Claim Settlement Ratio (CSR) denotes the insurer’s efficiency in servicing you.
  • Top-up: Top-up and Super Top-up Health Insurance Plans add to the coverage of your base policy, at a fractional premium. It makes sense to buy a suitable Top-up for high health insurance coverage for a low premium.
  • Installment Payment: Choosing an installment payment like monthly, quarterly or bi-annual payment mode might hike up your total annual amount.

It can be quite difficult to unravel the complexities of health insurance terms even after learning about some influencing factors. SANA.Insure is the right choice to guide you to reach an informed decision.

SANA.Insure offers you a host of services in a user-friendly digital environment. Visit our portal to gain access to hundreds of health insurance plans across 16+ insurance companies. You can comfortably select and compare between multiple plan options to arrive at the best choice for you and your family, and purchase it online hassle-free.

Our dedicated Relationship Managers coordinate with the insurance companies to ensure a swift and seamless claim experience. Should you want to discuss and particulars, our Health Insurance Experts are a WhatsApp chat away at 8278271818, or a phone call away at 1800 202 8118.

Wish you a healthy and happy life!

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