How are Health Insurance Premiums Calculated?
Though the standards and guidelines for insurance base premiums are set by the regulatory body, IRDAI, the insurance company can decide the upper limit. Hence, numerous factors related to the applicant are taken into consideration before determining the premium rate.
Insurance companies make use of medical underwriting to calculate the insurance price. In this process, the applicant’s medical history and risk factors are analysed to decide the premium rate. Furthermore, the number of claims raised and other such elements are reviewed while calculating the health insurance premium.
Key Factors Impacting the Health Insurance Premium
You might find various insurance companies mandating a pre-medical screening before issuing a health plan to learn more about your current medical status. Furthermore, your past medical reports, family history, lifestyle habits, etc. shall also be examined to estimate the insurance premium.
Your age is another vital factor that affects the health policy rate as younger applicants have lower health risks. Similarly, insurance providers take the applicant’s gender into account to decide the premium to be charged with respect to certain medical statistics.
Long-term health plans have higher premiums when compared to short-term policies. However, insurers often give rewards to policyholders opting for long-term insurance plans.
You can choose add-on covers to enjoy additional coverage with your base health plan. But these add-on covers need to be purchased separately and lead to an increase in your premium quote.
If you do not make any claims throughout the policy period, you shall be eligible for a cumulative bonus on your insurance quote. Based on the insurance company, you can enjoy an increased sum insured without changing the premium or a bonus on your insurance price.
Inflation Affecting Health Insurance Premiums
You still might be wondering why health insurance premiums increase every year, so there are some key elements that play a role, one of which is medical care inflation. As per the recent data*, healthcare inflation has increased to 8.4% from 3.8% during the pandemic. Even in the absence of a pandemic, medical treatments are getting more advanced with time, leading to an increase in cost. Moreover, a rise in the prices of medical items and medicines also results in healthcare inflation. This eventually affects you as the health insurance premiums keep going up during renewal.
Another aspect that impacts the insurance premium is your age which may change during the health insurance renewal. You are bound to age as time passes and with an increase in age comes the possibility of medical ailments. To ensure that the insurance company has sufficient risk cover, the health insurance premium increases with age.
*Source: The Hindu
How has the Pandemic Affected Health Insurance Premiums?
As we mentioned before, healthcare inflation is at an all-time high, impacting the urban as well as rural regions of India. Due to the second wave of the pandemic, there was a sharp increase in insurance claims, making it challenging for insurance companies. In 2020, the IRDAI had allowed a 5% revision in health insurance premiums to help with the loss ratios of companies. Thus, you shall find that the health insurance premiums have gone up with strict requirements of vaccination certificates and medical check-ups while purchasing new plans.
Need of Health Insurance
Health emergencies do not come with a warning and may affect anyone, no matter how healthy they are. In the event of such a medical crisis, the rising healthcare costs can leave a dent in your savings! To help prioritise your health without worrying about the monetary aspect of medical care, what you need is health insurance! Here are some benefits of having insurance coverage:
The cashless facility available under health insurance enables you to seek treatment without having to pay for it. Thus, you can recover from medical conditions without worrying about your finances.
Be it a planned treatment or emergency medical requirements, health plans make sure you can get the required medical care without any trouble!
Health insurance plans secure the expenses incurred after availing certain healthcare facilities and services covered under the policy This includes alternative treatment, daycare treatment procedures, in-patient treatment, critical illness cover, organ donor cover, and OPD covers for certain plans. Such extensive coverage ensures your healthcare needs are taken care of.
Cover for Pre-Existing Conditions
Insurance companies have started offering coverage for pre-existing diseases with a waiting period. Although you might be able to claim the expenses a couple of years later, you can still make significant savings in the long term!
Although the health insurance premiums are bound to increase, the pandemic has only emphasised on the fact that insurance coverage is extremely crucial. In the absence of sufficient insurance protection, you may end up spending your emergency funds on medical expenses.
So, avoid putting it off any longer and head over to Bajaj MARKETS to avail a suitable health insurance plan today! We recommend you to read the policy papers thoroughly and understand the applicable terms before purchasing any plans.