The premium charged for health insurance depends on these factors

Most people count on their insurance companies to provide details of their premium payments. Generally, online calculators help you calculate health insurance policy premiums for different plans using your age, sum insured, family members to be insured, policy tenure and other related factors.

Ankit Agrawal, chief executive officer and co-founder, InsuranceDekho.com, said, “Calculation of health policy premium facilitates the task of customizing a policy. It gives you the flexibility to customize the policy by amending factors such as sum insured and eases the buying process.”

Here are some factors to look at that affect your policy premium:

Age: A health insurance premium paid by those in their 20s or 30s will be nominal compared with premium paid by an older person. Generally, insurers consider risk premium (rate of mortality) for each age, and the same is incorporated when they finalize the premium amount for health policies.

Modified community rating: This factors in a wide range of factors to calculate the premium for an insurance product. It primarily involves political stability of a region, geographical location, trade activities and lifestyle in a specific area. Here, the insurance provider emphasizes a base rate that can be charged for a group that has similar characteristics such as gender, family size, age, profession and geographical region.

Medical insurance underwriting: When you fill the application form, it contains all the information about your risk profile. Underwriting involves discerning the applicant’s risk by studying such information. Insurance companies observe underwriting guidelines to determine whether one qualifies for the coverage and how much premium a person needs to pay.

Family medical history: When buying a health policy, you must furnish your detailed medical history to the insurer. If you are healthy and have no pre-existing disease, the premium may tend to be lower. Agrawal said a family history without any major ailment garners cheap premium, while that with recurring diseases implies a higher premium. “Also, people with higher body mass index are generally charged a higher premium than lower ones because of the high risk of contracting diseases,” he added.

Co-payment feature: While obtaining health insurance, the premium falls if you decide to opt for the co-payment option. Many policies have an inbuilt co-payment option. In co-payment, policyholders generally pay a specific percentage of the total claim amount, and the insurance company pays the rest.

Inclusions and exclusions: Policies with fewer exclusions will cost more. Most policies cover medical expenses during hospitalization for more than 24 hours, including medicine bills, ICU charges, room charges and doctor’s fees. But there are some exclusions in the policy. The insurer may or may not cover certain diseases in a particular policy. Hence, you must check the policy terms and conditions before buying one.

Agrawal said, “Policyholders must know that permanent exclusions such as obesity, Aids, smoking-related treatment and injuries caused by self are not covered.”

Points to note: If your policy’s annual premium is considerably high, you also get an option of equated monthly instalments (EMIs) to pay your health insurance premiums.

Using this option, you can pay a fixed amount every month for a higher coverage health plan according to your comfort level, without worrying about paying hefty annual premiums every year.

The premiums may fluctuate depending upon factors such as age, location and prevailing taxes or GST.

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