Individual Insurance

When you start planning to buy an insurance protection for yourself and your family, health insurance is at the top of the list and the most necessary protection plan. It is important to buy a best-rated health insurance plan to save yourself from financial trouble arising due to health issues or emergency. Unforeseen circumstances can invite financial insecurity in anyone’s life.

One should always compare the cost and benefits provided by different insurers before buying this insurance. Premium amount plays the crucial role in the buying process of family health insurance. Following are the factors that affect the premium amount of a health insurance plan:

1. Age: Premium amount will be cheaper if you purchase the policy at a very young age. Age is the most crucial factor that affects the cost of a premium. At a young age, the risk of suffering from medical issues is very low which ultimately reduces the premium amount.

Every insurer looks at the age band. Older people are more prone to health risks so with increasing age, the premium rate tends to shoot up. It is advisable to buy the policy when you are at the pink of your health.

2.Location: Premium rate is also affected as per the region or place of living as people who live in metropolitan cities are more prone to health issues and medical cost in such regions is expensive. Hence, the premium amount will be higher for such a metropolitan city.

City-based costing results in the different premium for different cities. The premium for Zone 1 cities like Delhi, Mumbai is higher as compared to other cities like Orissa, Bihar which fall under Zone 4.

3.Family-Size: As per the selection of family definition, the family floater sum assured is extended to the individual’s family including spouse and kids. The cost incurred in buying a family floater is pocket-friendly as compare to an individual health plan.

Size of a family also affects the premium amount. A family of size 2 will pay a low premium amount as compare to the family of 4.

4. Sum Insured Amount: Higher the sum insured, higher will be the premium amount. Premium amount depends on the cover you are opting and the limit of sum insured. Do not purchase a health insurance policy on the basis of low premium. Always assess how much cover you need considering future medical expenses.

5. Sub-limits attached with the policy: Every health insurance plan comes with sub-limits for expenses. Premium amount varies on the basis of inherent benefits and restrictions.

There is a sub-limit on doctor’s fee, nursing, room rent etc. One can remove the sub-limits attached within a health plan by paying an additional premium amount. If co-payment and deductibles are applicable in the policy, the premium amount will be lower.

6. Discounts: Availing a family floater health insurance plan provides the family discount on premium amount. Availing policy for more than a year provides a discounted premium rate.

Some insurers offer a discount on the premium amount if you choose 2 years policy term. Some insurer also provides a discount if no claim was there in the previous year health insurance policy.

Read About: Will the renewal is denied if the policy is not renewed before the expiry date?

7. Add-on Covers: In a basic health insurance cover, one does not get the maternity and OPD benefits as the premium amount is low but if you opt for a plan which provides maternity and OPD benefit, the premium charge will be higher.

Cost of opting for a health insurance plan with extensive benefit is higher. So one should select the coverages as per the needs, not on the basis of lower premium amount.

Apart from mentioned factors, maintaining a healthy lifestyle, claim free year, pre-existing medical conditions, gender, marital status also affect the premium amount.

Case Study:

Ashok works as a marketing executive in an SME. He has bought a health insurance plan to cover unforeseen medical emergencies. He was diagnosed with diabetes before purchasing the policy but he did not disclose this information in the proposal form in order to lower down the premium amount. This concealment of crucial information violated the principle of good faith.

Later, a claim has been filed by Ashok to get the reimbursement of medical cost incurred in the treatment of a severe disease. During the medical check-up, it was found that diabetes was the root cause of that disease.

In such a case, the insurer will reject the claim because of the deliberate disclosure of information. The duty of disclosure is been violated by the insured as he intentionally hides the information from the insurer to get the low premium amount.

Keep Reading: Things to Remember while making claim in health insurance

Unfortunately, Ashok has to bear the repercussions and pay all the medical cost himself. So disclosure of crucial information plays a vital role in health insurance policy.

Hence it is important not to hide any material fact or any pre-existing disease in order to lower down the premium amount.