Now that you have learned about how to calculate the health insurance premium amount using the calculator, take a look at the factors that affect your payment liability –
1. Expenses incurred for Marketing and Administration
Insurance companies incur huge expenses under administrating and marketing their products. These costs trickle back to the policyholders and reflect on their premium payments.
2. The Type of Plan you opt for
Your premium payment for your health insurance policy depends, to quite an extent on the type of plan you choose to avail.
For example, individual health insurance plans are more expensive than family floater plans and you will have to shell out more in premium payments with the former one.
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3. Co-payment Clauses and Deductibles
Few health insurance policies come with mandatory or voluntary co-payment and deductible clauses. With deductibles, the policyholder has to bear a part of the treatment expenses before their insurance policy kicks in.
With the co-payment clause, you will have to cover a percentage of the total treatment expense while the rest is covered by the insurance provider. But with co-payment and deductibles, the premium payment for the insurance policy is reduced to quite an extent. Thus, these are some of the factors which affect your policy premium.
Know more about the Difference between Copay, Coinsurance & Deductible
4. Add-on Covers
Add-on covers are one of the parameters that you have to provide in the health insurance premium calculator while calculating the premium amount.
This is because, when you opt for add-on covers over the existing benefits from a health insurance plan, your premium payment for the policy automatically increases.
5. Investment and Savings
Most insurance companies invest their capital in various public sector companies. These investments follow the guideline put forth by the IRDA to make sure that there are no compliance issues later on.
The premium you need to pay for insurance policies depends, to an extent, on the gains acquired by the insurance providers from market capitalisation.
6. Purchasing the Insurance through a Broker
Well, even though this does not increase your premium payment, per se, it does increase the total amount you pay for the policy. This is because you will have to factor in the charge levied by the broker for the service they provide.
7. For Pre-existing Disease Coverage
If you are availing the health insurance policy for covering pre-existing diseases, you will typically be provided with a waiting period, after which you can avail the benefits of the policy.
But there is a way to work around this waiting period - that is by paying an extra premium amount. Thus, your premium payment will also depend on whether you are availing a pre-existing disease cover.
8. Mortality Rate
Premium payment depends on the rate of mortality because this is the cost that insurance providers have to bear in case of any eventuality to any customer.
As a result, the premium payment differs for different age groups, with it generally being higher for senior and super senior citizens.
9. Medical Underwriting
Each insurance company offers several types of products like individual policies, group insurance policies, family floater policies, etc.
The underwritings for these policies are done in such a manner that the risks from each of these policies are balanced and the liabilities of the insurance provider are managed.
Thus, the premium for insurance policies also depends on how risky an individual is as a policyholder, based on their medical information.
10. Base Rating
This is the factor where insurance providers set a base rate that is charged to a particular set of individuals for possessing same characteristics like gender, age, family size, geographical region, their profession, etc.
For example, the base rate is set in a manner that individuals belonging to the age group between 40 and 50 years have to pay a higher premium than those belonging to the age group of 25-35 years.
