Factors Affecting Health Insurance Premium Calculation
A health insurance premium is influenced by many factors such as Age of the prospect, gender, mortality rate, coverage, type of policy, etc. Let us understand the factors influencing the health insurance premium:-
- Mortality Rate:
Health insurance premium primarily depends on the mortality rate of the group. In life insurance, the premium is subject to change each year while in health insurance the premium is fixed for a couple of years while some companies change the premium each year. This is due to the mortality rate which is calculated for a range of years in health insurance while in life insurance the mortality rate is subject to change for different age groups. It is well known that the mortality rate is higher in the elders when compared to the youngsters; this is due to the older people contracting diseases and being heavily prone to illness. The resistance power among the old people is less compared to the young people. The higher the mortality rate, the higher would be the health insurance premium.
Higher Mortality rate = Higher premium
Health insurance premium increases with the increase in age of the prospect due to the high mortality ratio which is observed to increase as the age increases. The health insurance calculator takes the mortality ratio into consideration while calculating the health insurance premium. Hence, it is advisable to take a health insurance policy at a very young age to reduce the premium at old age as the health insurance premium calculator displays a high premium at old age. The health insurance premium varies with age which is the reason there would be a steep increase in the premium as the age increases.
Gender determines the health insurance premium to be paid by the customer. Few insurance companies offer different premiums for men and women, on the basis that the women are more likely to live on an average 5 years more than men which means that they are subject to more chronic disorders when compared to men. Higher your lifetime, the higher the chance of getting contracted with different illnesses. This results in the higher life insurance premiums to be paid by the women when compared to men.
But it is important to note that most of the deaths occur in women at the time of pregnancy and the insurance companies would not be willing to insure a carrying woman. Due to the complication arising out at the time of delivery or during pregnancy, there are high chances that the mortality ratio can increase in women. Pregnant women are generally avoided by insurance companies until 6 months after the pregnancy due to the complications that can arise at the time of pregnancy or post-pregnancy.
- Health History:
The health history of the prospect also plays an important role in deciding the premium to be charged by the insurance company. The health insurance calculator takes into account the health history of the prospect and decides on the acceptance of the proposal. Every insurance proposal requires the health history of the prospect to be taken into consideration before deciding on the acceptance of the proposal. The health insurance underwriting process involves getting adequate information from prospect regarding the health history such as pre-existing diseases if the prospect has undergone any treatments or operations, any hereditary diseases, etc.
All these factors are considered by the underwriting team of the health insurance company before deciding on the health insurance premium. The health insurance premium calculator displays the premium if there are no pre-existing conditions or adverse health history. All the other cases with an adverse health history and pre-existing conditions will be examined by the underwriter to decide on the acceptance of the proposal.
It is very difficult to obtain a health insurance policy if you have any pre-existing disease such as Cancer or Heart attack or any other illness. Few companies won’t consider the health insurance proposals of customer with Diabetes and High blood pressure as these are the most common diseases which can cause some serious illnesses such as Heart attacks, Nerve damages, etc. It is important to declare the correct medical history in the proposal form so that the insurance company can take a correct decision on the acceptance of the proposal.
Obesity and underweight are the two factors that affect the health insurance premium to be paid by the customer. Being obese can lead to a number of health problems such as Heart attack, diabetes, High BP, etc which increase the mortality ratio. Being Underweight can also lead to contracting many diseases such as Malnutrition, Anaemia and vitamin deficiency disease, etc.
Coverage is the sum insured selected by the applicant is the maximum liability of the insurance company in case of hospitalization due to an accident or illness. The sum insured is paid to the policyholder or legal heir in case of the death of the policyholder. Sum insured can be increased or decreased by the customer on the Online Portal and the premium can be obtained within a fraction of seconds.
Insurance companies do not decide the sum insured required by the customer as they do in the case of life insurance. The sum insured should be selected by the customer at the time of purchasing the policy. There is no calculator which determines the correct sum insured to be selected by the customer as there are different ways in which the customer can get treated. For instance, one customer may get treated in a tier 2 city where the cost of heart surgery is Rs.5 Lacs and if the same customer opts to get treated for the same surgery in a tier 1 city the treatment cost would be Rs.10 Lacs. So, all these things should be taken into consideration while deciding the sum insured for a particular period.
The health insurance premium calculator increases the premium if the sum insured is increased, and reduces the premium if the sum insured is decreased. The increase in premium is due to the extra risk that needs to be taken by the insurance company which comes with the increased premium. The higher the coverage opted by the customer, the higher would be the premium to be paid by the customer.
- Smoking / Drinking:
The premium in the health insurance calculator increases if you have smoking and drinking habits. The health insurance premium calculator is designed to increase the premium or refer your proposal to the underwriter in case you have smoking or drinking habits which are considered risky elements in the health insurance underwriting process. The mortality rate is high in the case of people, smoking tobacco and consuming alcohol. A higher mortality rate leads to higher premiums which would be reflected in your health insurance premium calculator.
Consuming tobacco and drinking liquor can cause various diseases such as Cancer, Heart attack, Diabetes, etc which in turn increase the chance of death of the prospect. Hence the health insurance premiums for these categories are on the higher side when compared to people without these habits. Smoking and drinking are injurious not only to your health but also increase your health insurance premium.
- Hobbies / Occupation:
The occupation of the prospect also decides the health insurance premium be paid. For the purpose of insurance, occupations such as Persons working in Chemical, Fire Crackers, Army and police, etc. services are classified as Hazardous and pose a high level of risk for the insurance companies in terms of hospitalization. These occupations have a higher chance of hospitalization and thereby higher health insurance premium is charged.
The chances of hospitalization are high in the case of people engaged in these occupations as these are hazardous occupations. Hobbies such as Scuba diving, Paragliding also attract the special attention of the underwriters as there is a high mortality ratio in people having these hobbies. The health insurance premium calculator determines the premium of the prospect based on the hobbies and occupation of the prospect.
- Type of Policy:
One more major factor which determines your health insurance premium using the health insurance premium calculator is the type of health insurance policy opted by you. There are different types of health insurance policies available in the market which differs in the features offered. All the different types of health insurance policies have different premiums but all of them cover the health of the insured against hospitalization.
The premium of the company depends on the service levels also; the better the service, the higher the premium. It is advisable to opt for a health insurance company that provides better service and extensive coverage at the most affordable premiums. The most important thing to check is the number of cashless hospitals available in your location before deciding on the health insurance policy purchase.
- Claim History of Insurance Companies:
The health insurance premium calculator also takes into consideration the claim history of the insurance company or the previous year's loss ratio of the insurance company. The loss ratio is calculated as a percentage of the premium received to the claims settled. Higher the claims settled leads to increase in loss ratio which crosses 100%. For instance, if the loss ratio of the insurance company is mentioned as 120%, it means that the insurance company paid Rs.120 for every Rs.100 collected as a premium.
The claim history of insurance companies’ increases in certain conditions such as; inadequate pricing, Pandemics such as Coronavirus which worsen the loss ratio of the insurance companies to a great extent. The recent coronavirus pandemic has also increased the loss ratio of the insurance companies as the claims paid are on a record high. If the claim history of the insurance company increases, then the health insurance premiums also tend to increase.
Lastly but most importantly, the health insurance premium calculator takes into consideration the co-pay option. If the customer opts for co-pay then the premium to be paid would be reduced as the liability of the insurance company would be reduced in case of hospitalization. Co-pay is the share of the claim amount to be borne by the customer in case of hospitalization. For instance, if you opt for a 20% co-pay at the time of policy purchase and in case of hospitalization the claim amount comes to 1 Lac, then Rs.20k has to be borne by the insured in the form of co-pay.
What are the Ways to Get Low Premiums on Health Insurance
There are some factors that are to be considered to save the health insurance company policy premiums.
- Insure early: Buying health insurance from the best health insurance companies at an early age will benefit you more with longer validity periods and better coverage options. If you buy a health insurance policy at later stages it will invite the deprivation in waiting periods and additional benefits and exclusions.
- Coverage is vital: Health insurance companies might offer you good deals if you buy a health insurance India policy online. Covering your whole family with a single and best health insurance policy is vital. Look for better coverage options and buy Mediclaim insurance at cheaper premiums online and always stay covered.
- Be aware of changes: Medical insurance companies might update the coverages or the hospitalization benefits that might come in handy for you in necessity. So be up-to-date with the health insurance companies' policies.
- Sufficient coverage: Higher coverages will only increase your premiums. Save your health insurance policy premiums by buying the health insurance India policy with enough coverage that shields your medical emergencies and purchasing health insurance from the best health insurance companies will be an added advantage.
- Keep Reviewing: You are advised to keep reviewing your health insurance policy to know about the changed premium rates and treatment expenditure modifications.
- Be true: Saving on premiums will also be possible by providing your full details along with your and your family’s health status. This saves you during the critical illness periods where the monetary aid provided will be based on your given information.
- Know the claim process: Get to know the claim process and the claim settlement ratios of the health insurance companies beforehand to avoid unnecessary rejections of your claims.
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