health insurance premium


How to calculate health insurance premium

19th October 2022 8min read 153 views

Health insurance plans help you deal with medical emergencies. Your policy will take care of your financial bills, leaving you free to focus on your health and getting better. Most young people today evaluate only their health insurance premium or cost before selecting a plan. Unfortunately, lower premiums often mean less coverage, leaving you vulnerable to high hospital bills in the future. Let’s examine how your insurance company calculates insurance premiums.

What Is a Health Insurance Premium?

Your medical insurance premium refers to the fixed amount you pay the insurance company every month or year. They provide you with health coverage in exchange. Your premium depends on the sum insured amount, the various daily limits, and the deductible you agree to pay. Let’s see how the insurance company calculates your premium.

How to Calculate Your Health Insurance Monthly Premium

Your Age

Insurance companies will consider your health while calculating your health premium. Younger individuals are often healthier than older ones, which means they benefit from lower monthly and annual premiums. Most insurance companies offer separate plans for individuals above 60. The health insurance premium for senior citizens is often higher than others.

Your Medical History

You may have to complete a medical test before purchasing a policy. The insurance company will evaluate your family history and test results before providing your Mediclaim policy premium. If you’re susceptible to developing hereditary health issues in the future, you might have to pay a higher premium. Conversely, you could benefit from lower costs if your tests show you’re in good health and if your family doesn’t have any history of illness.

Sum Insured

As with all insurance plans, a higher sum insured amount will lead to a higher premium. Individuals who opt for INR 2 crores of coverage will pay significantly more than a peer who opted for a policy providing INR 10 lakhs as the sum insured amount.

Add-On Covers

You may want to enhance your insurance plan with add-on covers like critical illness care or maternity coverage. Each add-on you select will impact your  Mediclaim insurance premium. While customising your plan, you must only select add-ons that add a significant benefit to you based on your lifestyle choices and future plans.

How to Calculate My Insurance Premium Online

If you’re wondering how much a health insurance policy will cost, you can use an online calculator. These tools help you estimate the average premium you will likely pay each year or month. You need to input your age, city of residence, and the sum insured you want into the calculator. Once you click the calculate button, it will give you an approximation of the premium.

Will My Premium Remain the Same Every Year?

Your insurance premium amount remains the same unless you file a claim in a given year. The insurance company will consider how the medical issue could impact your health in the future. If they view significant changes, they could increase your premium to help them cover their risk. The insurance company will also provide a bonus or discount if you do not file a single claim. Your No Claim Bonus (NCB) makes you eligible to increase your sum insured when you renew health insurance without increasing your premium. Say you paid INR 20,000 for your health plan in April 2020. You did not file a single claim, so when you renewed the plan in April 2021, your sum insured amount increased. However, your premium remained at INR 20,000. You get additional benefits at no extra cost.

Today, everybody understands the importance of having health insurance. Now that you know how your premium gets calculated, you can use the knowledge to your advantage. Use an online premium calculator before purchasing a plan to understand approximate premium amounts. Once you find a policy you like, you can increase your voluntary deductible to further decrease your cost. Ideally, purchase your health policy when you’re young and in good health to enjoy low premiums with higher coverage.

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