Following factors affect the group health insurance premiums:

  • Size of the group
  • Average age of the group
  • Type of Occupation of the group members
  • Claim history of the employer (the group administrator in case of informal groups like travel and banks’ customers, RWAs, medical associations, etc.)
  • Features and Riders Opted in the Plan

Individual Effect of Each Factor on the Premium

Size of the grouplarger the better for a lower premium
Average age of the grouplarger the better for a lower premium
Type of occupationfield, factory, airline staff, and offshore workers are considered high risk clerical
staff is lower risk. higher risk groups will have higher premiums
Claim history of employer/group administratorhigher past claim ratios will lead to higher premium
Add on covers like critical and personal accidentmore riders will lead to higher premiums

Want to know what all is covered under a group health policy?

See: What benefits are available under employee group health insurance?

Case on Group Health Premiums

Size & Average Age of the Group

Kirti Bisht and Vivek Madhukar are friends from their college times. After completing their education, they both joined a company in their respective interests. Kirti has joined a large FMCG firm with almost 12,000 employees throughout the country, whereas, Vivek has joined a start-up venture to explore the blue ocean of business.

Vivek’s company has a staff of 12 so far, and they are mulling a purchase of group health policy for all employees and their dependents. Vivek remembers the policy premium as paid by Kirti’s employer and mentioned in her salary slip as Rs. 2,650 with an equal contribution from the employer Kirti has a health cover of Rs. 500,000.

Vivek expects to pay a similar amount as premium and opts for a Rs. 500,000 cover, however, the premium chargeable to him was stated at Rs. 3580.

The insurer gave him the reasons as follows:

“The number of employees in the firm is very less even if you add the family members of all employees it only reaches the minimum covered life under the policy which is 20.”

The insurer also states that the premium could’ve been higher if his firm would try to match the features and riders offered by Kirti’s employer.

Vivek is not very happy with the information, but he doesn’t want to increase the premium any further. There is some good news for Vivek though, his premium is lower:

  • Average age of the employees in his company is only 29 years compared to the average age in Kriti’s company, which is 37 years
  • The claim history will be cleaner for Vivek’s company as there are less no. of people and the premium may go lower in future.

See: What are additional benefits available under Group Health Insurance?

Type of Occupation & Add on Covers

Giriraj Sundaram is General Manager Human Resource at Vatsam Precision Equipment (VPE) Pvt. Ltd. He has been tasked with ensuring the motivation level of the employees through various employee benefit schemes.

Group health insurance is one such scheme approved by the management based on the benefits of the policy. Giriraj is now considering the premium payable under the policy and comes across the following information:

total number of employees at vpe:120
total clerical and sales staff:30
total staff involved in engineering processes:65
staff involved in quality management and machine
up keep:
10
other staff in management roles:5
permanent drivers and peons:10

The insurer has provided the premium based on the weighted average of the occupational risks borne by the employees and workers, with the highest risk weightage given to the engineering staff and least to the clerical staff.

The initial premium payable by the firm is Rs. 3 lakh for the policy. The insurer offers a no claim bonus of 5% to the company for each claim free year. However, any year when there are more than 5 claims, the premiums may go up depending on the risk category under which these claims fall.

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