1. Age of the Insured
One major factor in determining premiums in health insurance is your age. This is because as one ages, it means a higher chance of mortality, hospitalization, and medical expenses.
Thus, while a 50-year-old person might have to pay a premium of ₹6,208/year (for a sum insured of 3 lakhs), a 25-year-old person would have to pay a significantly lower premium of around ₹2,414/year.
In addition to this, some insurance companies put an age cap in place for individuals buying a new health insurance policy of 65-80 years, as the older one gets, the more difficult it is to determine their risk factors and health-related expenses.
2. Type of Plan Chosen
Your health insurance premium will change depending on the type of health plan you choose. For example, a family floater plan usually costs less than an individual policy, as the chances of one individual falling sick is higher. However, in a family floater plan, remember that the premium will be based on the age of the oldest member covered.
3. Sum Insured
The sum insured that you opt for will also affect your health insurance premium. Since the sum insured is the maximum amount you can claim from your insurer for medical expenses, a lower SI can result in a lower premium, and vice versa for a higher SI.
However, if your total medical bills exceed your SI amount, you will have to pay the extra cost out of your own pocket. Therefore, you must choose your SI carefully as you don’t want to increase the amount you have in case of emergency.
4. Habits and Lifestyle
Bad habits like smoking, chewing tobacco or snuff will also impact your premium. These habits will increase the chance of lung infections, cancer and other critical illnesses, meaning that smokers will have a higher health insurance premium than non-smokers.
This increase for smokers can be almost double those for non-smokers. For example, if a 25-year-old non-smoker might have to pay ₹5,577/year for a sum of ₹1 crore, a smoker of the same age would pay around ₹9,270/year for the same amount.
5. Pre-existing Diseases
When a person suffers from pre-existing medical conditions which have had a long-term effect on a person’s health, such as diabetes, high blood pressure, or asthma, they will likely have more hospital expenses as well as higher medical bills. This means that they will have to pay a higher premium compared to healthy people of the same age group, as they are.
The amount your premium increases will depend on the pre-existing condition that you have, as well as its severity as noted by a doctor.
In health insurance, a co-payment is the percentage of the claim amount that you will have to pay. For example, if you have a 15% copay, your insurer will pay out 85% of the claim amount, while you handle the rest. So, it is like you and your insurer are splitting your medical bills.
Some health insurance policies have a mandatory co-payment clause, while others will let you choose your copayment amount. It is important to note that while a higher co-pay will lower your total premium, you will have to pay a larger amount during claims. But with a lower co-pay you will have a slightly higher premium, but you will pay less during claims.
7. Add-On covers
Additional covers (also called add-ons or riders) are additional coverages that you can opt for in addition to your existing health insurance policy to enhance its benefits for an additional premium.
When you opt to customize your health insurance with add-on covers like a Maternity cover, Critical Illness cover, Personal Accident cover, or AYUSH treatment cover, you will have to pay an additional premium.
However, according to the IRDAI, the total premium for all add-ons availed under a single health insurance policy can’t exceed 30% of the original premium amount. So, if your premium was ₹5,000/year, and you decide to include 5 add-ons, the additional premium can’t be more than ₹1,500.
8. Family Medical History
If your direct family members (like parents or grandparents) have shown a history of illnesses like heart diseases, cancer, Alzheimer's, etc., that puts you at a higher risk of contracting these illnesses yourself. This will increase the rate of your premium.
9. Where You Live (Zones)
Every geographic location will be different in terms of risks, medical costs, and other environmental factors like pollution, climate, etc. In India, different cities are divided into zones, classified based on that city’s medical expenses. The higher the medical expenses in a city, the higher its zone, and the higher your premium will be.