Health insurance saw a massive rise in the times of COVID-19 and with it, the premiums weren’t any cheaper.
Pankaj Arora, MD and CEO, Raheja QBE General Insurance says, “People are generally less aware of the processes involved in calculating premiums, which leads them to pay the provider unknowingly. It is always better to know what the factors are, based on which a premium is decided.”
Here is the list of factors that affect your health insurance premium:
- Individual Medical History- The health insurance coverage is granted to a policyholder based on the declaration of the medical condition made by him/her. In case of any medical history/ailment in the past and or lifestyle diseases such as diabetes or hypertension, Arora adds, “the premium is suitably loaded or a pre-existing exclusion is offered to the proposer.”
- High Body Mass Index (BMI)- A high body mass index makes a person susceptible to more diseases. This in turn leads to an increase in premium. Hence, people with higher BMI Indicate high body fatness which may lead to health problems.
- Lifestyle habits – Most companies, experts say offer loading in premium rates in case the proposer declares lifestyle habits such as smoking, consumption of tobacco and alcohol. Arora points out, “People with such lifestyle habits are at a higher risk of contracting diseases related to the consumption of such items and hence are rated higher than those with no such habits.”
- Age bracket- The health insurance premiums are ascertained based on the probability of a higher risk of contracting the illness. For instance, people in the higher age bands upwards of 40 years are rated higher due to a higher probability of illness
Benefits of buying health insurance at a young age
Age is not just a number when a health insurance premium is considered. It is another important factor when it comes to buying a health insurance policy. Arora explains, “young, and active individuals have a lesser chance of developing diseases and hence rated relatively lower than people in higher age bands.”
Another benefit of starting early into health insurance is that most policies cover pre-existing diseases with a waiting period of up to 4 years. Experts say in case an individual starts early the risk of pre-existing illness exclusion is avoided.
Additionally, most health insurance policies offer a sum insured upgrades without any additional premium in case an individual has run the policy claim-free.
“By starting at a lower age, an individual has a high chance of accumulating a higher sum insured considering claim-free experience in a policy period. The same can be utilized at higher age bands (where the risk of contracting the illness is higher) in case an individual continues the policy,” adds Arora.