Rising medical costs and sudden health emergencies are encouraging individuals to secure health insurance. However, the biggest concern in doing so is the health insurance premium, which often feels like an added burden on the family budget. For middle-class families, finding the right balance between affordable premiums and adequate coverage can be difficult. In this blog, you will learn how health insurance premiums are calculated and explore practical ways to reduce them without compromising on protection.
Understanding Health Insurance Premiums
When you buy a health insurance policy, the most common term you hear is the premium. It is an amount that you pay to your health insurance company to keep your health coverage active. It is determined based on various factors, including age, sum insured, plan type, and medical history.
You should pay your health insurance on time, irrespective of whether the coverage has been used or not. In fact, when you do not claim the medical insurance, you can avail the no-claim bonus.
Factors Affecting Health Insurance Premium
Health insurance premiums depend on the various factors that assess the risk and potential cost to the company. Let’s take a look at the 5 common factors that affect a health insurance policy.
Age
Age is the most crucial factor for your medical insurance premiums. It is directly proportional to your premiums; the higher your age, the higher your health insurance premium. The reason is that as you age, there is a chance to develop age-related issues like hypertension, diabetes, arthritis, etc.
Location
Your locality also determines your health insurance premiums because of the cost of healthcare facilities in your area. The cost of medical facilities is higher in Tier I cities as compared to Tier-2 or Tier-3 cities. For Example, the health insurance premiums are higher in Delhi as compared to Jaipur.
Pre-Existing Diseases/ Medical History
Your medical history or pre-existing diseases play a significant role in your medical insurance premiums. PEDs are conditions that have been diagnosed, treated, or shown symptoms within the 48 months before applying for coverage. If you have existing health conditions, such as high blood pressure, diabetes, or thyroid issues, you can still raise a claim. However, this increases the liability of the medical insurance company. To manage this risk, they usually charge higher premiums and cover such conditions only after a waiting period of up to three years.”
Sum Insured
The sum insured is the maximum amount that you can claim under the health insurance policy. It also affects your premium amount, as the higher the sum insured, the higher the premium. The important point to note is that a higher sum insured provides wider coverage but comes with a higher premium. Therefore, you have to assess your health needs carefully and choose the health insurance that provides you with adequate coverage at an affordable premium.
Lifestyle Habits
Your lifestyle habits have a major impact on the premium for your health insurance policy. Habits such as smoking and drinking are bad for health and risk health issues. As a result, there is a significant likelihood of a higher premium cost compared to a non-smoker or non-drinker.
Gender
Your gender also plays an important role in deciding your premium. Since men and women have different lifestyles and health risks, insurers assess them differently while calculating premiums. For example, men often face higher premiums because they are more prone to heart disease, smoking, and related health issues. On the other hand, women in their 20s and 30s may be charged more due to maternity expenses and pregnancy-related claims.
How to Calculate Your Health Insurance Costs
Here is a clear step-by-step process that can help you estimate your health insurance coverage needs and choose a plan that fits both your health needs and budget.
Determine Your Needs
Start by assessing your healthcare habits. Consider how often you visit doctors, your medication needs, and any planned treatments. This evaluation helps you determine the coverage you truly require and avoids paying for services you might never use.
Evaluate Personal Information
Your age, location, gender, and habits influence your health insurance premiums. Younger and healthier individuals usually pay lower premiums, as compared to senior citizens with pre-existing diseases. Having these details ready before comparing plans ensures your calculations are accurate and tailored to your real situation.
Utilise Online Tools
Use reliable platforms like Niva Bupa Premium Calculator, which allow you to input your personal details and healthcare needs, then instantly compare plan options. By using it, you can quickly identify which policies provide affordability with adequate coverage.
Compare Plan Tiers and Types
Every plan tier, from basic to premium, comes with different deductibles, copays, and coverage limits. Don’t just look at the premium alone. Instead, calculate how much you might pay if you frequently need care versus if you rarely visit doctors. This approach reveals your true yearly cost.
Tips to Reduce Health Insurance Premiums
As an individual, you always have a goal to buy a health insurance plan that provides great coverage at lower premiums. Here are the tips you can consider:
Purchase a Policy at a Younger Age
Buying health insurance early in life helps you save on premiums. When you are young and healthy, insurers see you as a lower risk and have a low chance of developing medical conditions. It helps to get adequate coverage at a lower premium rate.
Buy a Family Health Insurance
Instead of purchasing separate policies for each member, consider a family health insurance plan. It covers your entire family under one policy and is more cost-effective, offering wide protection for all members.
Choose a Policy with a Low Sum Insured
Opting for a lower sum insured helps you reduce your premium cost. A lower amount means a lower premium. However, make sure the chosen coverage is sufficient to meet your family’s medical needs before finalising the plan.
Quit Smoking
Smokers are more likely to develop serious illnesses like lung disease and cancer, which makes them high-risk for insurers. By quitting, you can improve your health as well as pay much lower premiums in the long run.
Maintain Good Health and Lifestyle
A healthy lifestyle directly impacts your insurance costs. If you suffer from pre-existing diseases like high blood pressure or diabetes, you may have to pay higher premiums. On the other hand, staying fit, eating well, and avoiding health risks ensures lower premiums and better acceptance from insurers.
Final Thoughts
Health Insurance is a necessity due to the rising medical costs. For many people, premiums feel like a burden, but understanding how it is calculated and taking small steps can make health coverage affordable and effective. Start early, choose wisely and maintain a healthy lifestyle. Remember, health insurance is not just an expense; it is an investment in your family’s financial security and peace of mind.
