The premium that one pays for health insurance depends on a range of factors like pre-existing medical conditions, family’s medical history, age, gender, lifestyle, profession and BMI. Moreover, the health insurance premium amount also depends on your zip code. Your place of residence has a major influence on the premium amount of your health insurance. Keeping all other factors constant, the premium amount for the same health plan can vary from city to city.

Reasons for varying premium across cities

Differences in the premium amount for a similar policy under similar conditions arise on account of the following factors:

More health risks

Owing to the sedentary lifestyle, people residing in metro cities are more vulnerable to heart diseases, lung diseases, diabetes etc. Also, many of the major cities are witnessing unprecedented pollution and degrading air quality, giving rise to multiple health issues. Accordingly, the health insurance premium for metro cities is higher than the relatively smaller cities and towns.

Cost of living

The amount of premium also depends on the overall cost of living of the city. A city with a higher cost of living will have a higher cost of medical services. Consequently, higher cost of treatment will call for a higher premium amount. If the cost of the treatment is on the higher side, the cost of covering an insured for the same will also be higher, implying a higher premium amount.

Available medical care

The premium amount also depends on the quality and quantity of healthcare facilities available in the city. For instance, the quality of treatment in a metro city will be far better than the quality of treatment in a small town. So, the premium of a health insurance policy in a metro city might be higher than that in small cities and towns.

Awareness, demand and competition

Premium amount also depends on the awareness in people about health insurance, demand for the same and the competition amongst health insurance providers in the area. If there are a lot of active insurers in the city, then the premium amount would be a competitive one. However, if awareness of the need and significance of health insurance is less among people, even in the absence of rigorous competition, the premium amount would remain low.

The Indian cities have been categorized into three zones of health insurance premium, namely Zone 1, 2 and 3. The difference in three zones stems from the difference in prevailing costs and other factors that have been mentioned above.

While metropolitan cities fall under Zone 1, Zone 2 comprises of the Tier 1 cities and the rest of the cities falls under Zone 3. There can be a significant difference of around 10-30% in the premium amount across the three zones.

Learn more about different 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.



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