What is Health Insurance Premium?

A health insurance premium is the cost incurred by the mediclaim policy-holder in order to benefit from health insurance coverage. In return, the insurer compensates the policy-holder or other individuals covered under the plan with benefits stated in the stipulated contract. The premium amount for a health insurance policy in India must be paid periodically and is not a straight-forward one time cost.

How is Mediclaim Policy Premium Calculated?

The premium amount paid to the insurer is not an abstract figure. The process of calculating the premium figure is cumbersome and involves technical expertise. A broad range of factors are incorporated in the premium calculation process.

Some of the aspects considered while calculating the premium amount for a health insurance policy are-
  • Rate of mortality: Premium amount increases with one’s age, medical ailments like diabetes, etc.
  • Personal data of the insured individual: Age, personal medical history, family medical history, lifestyle habits like smoking or drinking
  • Marketing expenditure incurred by the insurer: Commission to brokers, advertisement costs, etc.
  • Administrative expenditure incurred by the insurer: Operational expenses, salaries paid to actuaries, etc.
  • Investments made by the insurance company in stipulated instruments (based on IRDA guidelines)
  • Policy underwriting: It is a process undertaken by the insurance company to distribute associated risks and prevent expected losses
  • Community Rating: Involves factors associated with the geographical location of the policy-holder that may have a direct or impact on the health of the individual like political stability, industrial development, access to essential utilities (water, electricity, etc.)
  • Amount of sum assured: Higher the sum assured, higher the premium amount

Benefits of Medical Policy Premium Calculator

Since the calculation of the premium amount for a health insurance policy is extremely complicated and challenging, incorporating an automated online tool to carry out this task would save a lot of time and effort. Online calculators incorporate sophisticated use of technology and advanced formula-based methodology.

The benefits of using a medical policy premium calculator are-
  • Knowing the premium amount beforehand can equip the potential policy buyer with crucial information that may influence the buying decision
  • Quick comparisons between similar health insurance plans can be made, so as to select the mediclaim policy best suited to one’s requirements
  • Efficient method as it eliminates time-demanding tasks like personally meeting with an insurance agent or reaching out to the insurance company by visiting a branch office
  • Financial planning becomes smoother if one knows the tentative monthly or premium cost in advance. This enables the policy-holder to allocate funds meant for keeping the mediclaim policy in force.
The task of personally computing a comprehensive premium amount of mediclaim policies can be time-consuming and exhaustive. Thus, this job is best left to an online calculator that would yield the best estimate of the premium figure in the blink of a moment.

Learn more about Health Insurance Plans here.

DISCLAIMER

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.



Trending Articles

Popularly Searched Terms

Cashless Health Insurance

Health Insurance Benefits

Health Insurance Coverage

Health Insurance Policy

Maternity Insurance

Latest Articles

health-insurance
health-insurance

What is High Value Health Insurance & How Much Coverage Do I Need?

Read More
Posted on 20 May 2020
health-insurance
health-insurance

What Are Sub-Limits In Health Insurance?

Read More
Posted on 19 May 2020
health-insurance
health-insurance

Three Reasons to Buy Online Health Insurance at an Early Age

Read More
Posted on 18 May 2020

Featured Articles

image abc-of-personal-money
abc-of-personal-money

Are Millennials Any Different When It Comes To Planning Financials?

Read More
Posted on 05 February 2020

Relevant Articles

image life-insurance
life-insurance

Services You Should Expect from a Life Insurance Company or Intermediary

Read More
Posted on 01 June 2020
image life-insurance
life-insurance

Your 5-Point Guide for Buying a Suitable Life Insurance Plan

Read More
Posted on 27 May 2020
image life-insurance
life-insurance

Cancellation of Term Insuring During Free Look Period

Read More
Posted on 27 May 2020