How Is The Premium Calculated In Health Insurance?

Premium payments are to be made at regular intervals to the insurance company to keep your purchased health insurance policy in force and to avail of its benefits when required in case of an emergency. You can add on top-up covers to enhance the benefits of your existing policy at a suitable price. The premiums rates are calculated by considering several factors that are predefined by the insurer. You can know the premium amount for any desired policy with the help of an online effective tool which is a premium calculator. 

A health insurance premium calculator is an online program to calculate the premiums of the customers which gives them a fair idea of their future investments and lets them adjust the details to customize the health insurance policy. There is a broad range of factors that help the insurer determine the premium cost for a certain policy. It also differs according to some customizations that are made by the customer for their ease and benefit. 

How Are Premium Payments For A Health Insurance Policy Calculated? 

A list of guidelines is set by the insurance company to determine the premium of a health insurance policy. Let us look at some of the key aspects that affect the premium costs for a health insurance policy: 

1. Investments And Savings

The premium paid by the policyholders is subjected to returns earned from the capitalization which is invested by the insurance company in the public sector investments, following the IRDAI guidelines.  

2. Age

The age of the policyholders determines the cost of premium payment. With the increase in age, the cost of premium also increases as individuals with a higher age are at a larger risk of contracting diseases like diabetes, cancer, etc. which require high costs of treatments. 

3. Gender

The premium costs alter according to your gender. Men and women have to pay different amounts of premiums. Women visit the hospitals more often than men, and therefore, the premium cost for them is higher.

4. Marketing And Services Expenditure 

Insurance companies cover the expenditures associated with marketing and services from their policyholder via their premium payments. Premium costs help the companies to incur the marketing and services expenses which are higher in number. 
 

5. Medical History 

Individuals with a medical history or any pre-existing disease have to pay a larger sum of premiums. Some people suffer from chronic disorders like cancer, diabetes, nervous breakdown, organ transplant, etc. which require high costs of treatment, and therefore, premiums for such diseases that pre-exist are higher.  

6. The Plan Chosen

The premium costs also depend on the health insurance plan that has been chosen by the policyholder. Sometimes, people add top-up covers to their existing plans to enhance the benefits and in such cases, the premium costs add up. Customizing the health insurance covers also increases the rate of premium payments. 

7. No Claim Bonus

If a policy is not claimed for a year within the policy tenure, the policyholders get benefits like no claim bonus under which they are liable for discounts on their premiums. 

8. Lifestyle 

People with an unhealthy lifestyle have to pay extra premiums. If an individual is a smoker, he/she has to pay an extra premium amount. It is a way to promote and encourage a healthy lifestyle among people. 

Conclusion 

You can calculate your premium rate online without much handy calculation by using a premium calculator. It is not only effective but also accurate and reliable. You must understand that if you choose a health insurance policy that has a higher sum assured under it, then the rate of premium is directly affected. Above mentioned factors also influence the premium rates of the health insurance policy. However, the increase and decrease in the premium costs depend on the guidelines officially issued by the IRDAI and are compulsorily followed by all the health insurance companies in the market. 

Also Read: A Comprehensive Guide to Paying Health Insurance Premiums in Instalments

Saving on Health Insurance Premiums

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.