6 Factors Affecting Health Insurance Premium

The two key components of most of the health insurance plans are the sum insured and the premium. While we leave no stone unturned to understand how much our health plan cover in hours of need, we tend to take the premium as stated, without pondering much on its constituents or breakdown costs. However, it is of paramount importance to know why the premium has been arrived at. For this purpose, we need to be aware of the f actors that affect the health insurance premium .Following are the major factors that determine the premium of a health insurance policy:

For the same policy features, the premium amount for people with pre-existing medical conditions like diabetes, heart blockage, epilepsy etc. is more likely to be higher than those without any such medical conditions. This is because people with such conditions are already at a higher risk of medical crisis and thus, higher medical costs.

The amount of premium that one pays also depends on the medical history of the insured’s family . If the insured person has a family history of health conditions like high blood pressure or diabetes, he/she will be prone to inheriting those conditions. This results in a higher premium amount to be paid for a health insurance policy.

Usually, the premium rate for young individuals is found to be significantly lower than middle-aged persons because of the fewer or unidentified diseases among the young policyholders. Further, the cost of health insurance plans for senior citizens is even higher.

The premium amount for a smoker or regular drinker will always be higher than that of the non-smokers and non-drinkers. The reason being, people with such habits have higher health risks like cancer, liver cirrhosis, lungs infection, stroke, respiratory problems etc.

The health insurance premium for people with higher BMI is more likely to be higher in comparison to people with normal BMI. The correlation between higher BMI and a higher premium is derived from the fact that people with higher BMI are more likely to fall prey to ailments like joint pain, heart problems, diabetes etc.

If an individual works in a hazardous environment where he/she comes in direct/indirect contact with harmful radiations and chemicals, his/her health insurance premium will be higher. Again, people working in stressful environment have higher possibility of health crisis, which leads to a higher premium.

The health insurance premiumcan also be affected by the area of residence. A lot of insurance companies determine the premium cost based on the location of the person.

Insurance companies might charge a higher premium cost to people who have never purchased health insurance before. This is because they think previously uninsured people will visit the doctors and hospitals frequently to avail the cover.

The tenure of a health insurance policy can also impact the premium cost. The cost of health insurance with a longer tenure might be cheaper compared to policies with short tenure.While buying a health insurance plan , you need to keep in mind that any of the above-mentioned factors and conditions can raise the possibility of medical assistance and treatment cost, leading to a higher sum insured and consequently, a higher premium rate.Learn more about different Health Insurance Plans here.

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.