About Health Insurance Premium Calculator

We know for a fact that you and many others have no idea regarding the health insurance premium calculations. Due to the complexities involved, a lot of people choose to avoid it and settle for the quotes given to them by their insurance provider.In this article, we will be taking in-detail about health insurance premiums and health insurance premium calculator. So, let us begin.

What Is Health Insurance Premium?

The health insurance premium is the amount that you pay towards health insurance policy at definite intervals. Paying your premiums regularly and on time will keep your health insurance plan running, and will come in handy in case of any medical emergencies.

How Is Health Insurance Premium Calculated?

A lot of us must have wondered how exactly the insurance companies calculate the premium amounts for their health insurance plans.

Multiple factors are taken into consideration when deciding the insurance premium amount. Moreover, every insurance company has some company-specific guidelines that it adheres to before finalising the insurance premium for different health insurance plans.

Some of the most common guidelines followed by insurance companies are as follows –

  1. Marketing and Administrative Expenses – A lot of things are covered under the marketing and administrative expenses. The expenses involved are recovered from the premium amounts paid by you (the policyholder). It includes the cost incurred when designing a health insurance policy, marketing cost, broker commission, advertisements and brochure costs, and other operational expenses.

  2. Savings – It is the portion of your premium amount that is used for various public investments. These investments are made based on specific rules and regulations issued by the insurance regulatory body of the country. Moreover, the insurance premiums are calculated based on the returns of these capitalisations.

  3. Medical Underwriting – Health insurance plans are underwritten to maintain the balance between individual and group medical policies. Further, the risks involved is analysed based on different angles and a wide range of factors. The process of medical underwriting states the instances of medical coverage provided and under what circumstances can it be denied. It is, however, noteworthy that this step prevents the insurance company from incurring losses.

  4. Rate of Mortality – This is nothing but the loss incurred by the health insurance company in case of any eventuality to the insured individual. The cost varies depending on the age group and income of the individual and is usually high for senior citizens.

  5. Personal History – Certain insurance providers may or may not conduct a health check-up before you avail mediclaim policy with them. A primary health update is still taken into consideration before granting you medical insurance. Things like your health status, family’s health history, personal habits, and your age at the time of taking the policy play a vital role in deciding the insurance premium rates.

Medical Insurance Premium and Tax Benefits in India

Every health policy comes with medical benefits and tax benefits under Section 80D of the Income Tax Act. The tax benefits offered are dependent on the way you plan to pay your premiums and the policyholder.

Here are some conditions that help determine whether you enjoy tax benefits on your cashless health insurance plans –

  • Tax is exempted under Section 80D if the premiums are paid from the monthly taxable income. For instance, income earned through dividends is not taxable, and hence, the premium paid using that money is not taxable.

  • The mode of premium payment also plays a vital role in tax benefits. If you pay premiums through cash, then the tax exemptions under Section 80D are denied. All other payment modes like cheque, demand draft, and net banking are tax exempted.

  • Health insurance premiums paid for immediate family members are exempted from tax. It includes premium paid for your spouse, parents, and dependent children.

  • A specific premium amount is eligible for tax exemption. For instance, the premium amount paid for self, spouse, and children should be within INR 15,000.

The Need for Medical Insurance Premium Calculator

Understanding the calculation of health insurance premiums is quite essential. However, the task is easier said than done. Health insurance premium calculations include complex algorithms. Because of which, people tend to agree with whatever insurance premium amount is quoted to them.

But thanks to online health insurance calculator tools, this task can now be done within a few minutes. Moreover, it helps you understand the policy a little more in detail before you purchase it online.

Buy Health Insurance Online

Today, everything is readily available to us online. The same goes for health insurance schemes. Many insurance providers sell health insurance online on their official website. In case you are confused between different online plans, you can even compare these policies online and choose one with affordable premiums, and that is best suitable for your needs.

General FAQs

Q: Do I need health insurance?

A: Yes. Even if you do not require health insurance at the moment, the need for it can arise anytime anywhere. Also, it is always better to have a health insurance policy as medical emergencies can be financially burdensome.

Q: Is health insurance the same as life insurance?

A: No. A life insurance policy will protect your family from financial loss that may arise in case of your sudden demise. A health insurance policy will protect you and your family members in medical emergencies and expensive treatments.


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