Are You Paying Higher Premium For Your Health Insurance?

While selecting a suitable health insurance plan, the first thing that people look to evaluate and compare is the premium involved. There are many factors that play a vital role in the premium calculation such as personal medical history, family medical history, etc. However, there is one more factor that influences the premium calculation that you probably don’t know about.The city you reside in also has a role to play in the calculation of your premium amount. This categorization is known as Zone-Based Health Insurance s. Read on to learn about this grading system in depth.

India is a diverse country. Not only in terms of its people, but also in terms of various other aspects. Every city is exposed to a different set of environmental conditions such as climate, pollution levels, water quality, etc.It is a well-known fact that hospitalisation and other medical costs are much higher in larger cities or metropolitan cities as compared to smaller cities in India. Also, it is also common knowledge that people residing in metropolitan areas are much more prone to lifestyle diseases and other ailments.In a bid to make the entire system of premium calculation more equitable, insurance companies have come up with zone-based health insurance.

Under Zone-Based Health Insurance , the premium for a health plan may differ from city to city. How have they managed to segregate cities? By classifying them into three different zones. They are:

Please Note: The classification may differ based on the insurer.The premium is based on the average medical costs prevailing in the city. As we can all know, healthcare in Delhi and Mumbai is extremely expensive, the premium amount for health insurance plans for customers residing in this Zone (Zone 1) is also on the higher side.Medical treatment expenses reduce as we move from Zone 1 to Zone 2 and 3. Therefore, health insurance premiums for customers residing in Zone 2 are further reduced and for those in Zone 3 are the lowest.

• Reduction in Premium: One of the major advantages of zone-based health insurance is that it allows for a reduction in the premium of the policy by at least 10-20%, which is quite significant.
• Zone Upgrade Option: If a policyholder relocates from a city in Zone 2 to a city falling in Zone 1, he or she can avail the zone upgrade cover. Similarly, if you reside in Zone 3 but wish to get a particular medical treatment done in a hospital located in Zone 1, then a zone upgrade cover will come in handy.

In Conclusion Zone-based pricing is a customised pricing model that helps people pay the appropriate sum insured. That being said, it is important to carefully read and understand the terms stipulated under your healthcare policy.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.