Zone Based Health Insurance Plan in India: Zone 1 & 2
Cities in India are classified into three tiers according to their population. While this classification was implemented for allocating House Rent Allowance, it has several other uses as well. One of the most significant uses is the cost of health insurance policies.
Yes, that’s right!
Your health and the sum insured under your healthcare policy are not the only factors that help lower your premium payment towards your policy. The city where you reside plays an important role in determining the cost of your insurance policy. This categorisation is known as zone-based health insurance.
What is Zone in Health Insurance?
It is common knowledge that healthcare in larger metropolitan cities costs more than that in smaller cities. That is why insurance providers have curated different health insurance zones to make seeking healthcare more affordable for those in smaller cities.
But, what does the word “zone” in this respect mean?
A zone is basically a specific area that is different from other areas based on certain factors, such as geography, population, lifestyle, time, etc. However, in the case of health insurance policy, it is divided on the basis of the cost of healthcare.
Types of Health Insurance Zones in India
India is divided into three zones: Zone A, Zone B, and Zone C. These zones are divided based on the population of the cities and other factors. With zone-based insurance plans, the premiums paid to the insurers are decided according to the expenses in different cities.
The different types of health insurance zones in India are:
Types of Health Insurance Zones at Digit
As you now know, the zones in India are classified into 3 categories, but in the case of health insurance, the classification of different cities can differ from one insurer to another.
At Digit, our health insurance premiums vary based on healthcare costs across different cities. For convenience, they are split into two zones: Zone 1 and Zone 2 health insurance.
Benefits of Choosing Zone-Based Health Insurance Plans
Now that you are familiar with the list of health insurance zones, let's talk about the many advantages that come with a zone-based health plan:
You have a good chance of receiving a reasonable premium rate with a zone-based health insurance plan. You do not have to pay Zone A premiums if your insurance falls within Zone B. Therefore, depending on your residency, the projected premiums save significant money.
You can choose from different sum-insured plans regardless of the city in which you live. You may pick a plan that best suits your needs. Remember, as the sum insured increases, the premium may also increase.
There are various cashless hospitals available in health insurance that do not require payment. Bills will be paid to the hospital immediately if your hospital is a cashless network hospital. At Digit, there are 9000+ network hospitals from where you can make cashless claims for treatment.
How Does Zone-Based Health Insurance Work?
In cities located in Zone 1, where medical care costs are also expected to be higher, health insurance premiums are often higher. Understanding the workings of zone-based health insurance is crucial for effectively utilizing its benefits:
Geographical Segmentation
Regions are divided into zones based on healthcare costs and economic factors. Each zone represents areas with similar cost structures, making premium calculations more precise.
Premium Calculation
Premiums are set according to the average healthcare costs within each zone. Higher-cost zones will have higher premiums, reflecting the increased cost of medical services.
Policyholder Location
Policyholders are assigned to different zones based on their residential addresses. They receive premium rates and coverage options tailored to their specific zones.
Benefits and Coverage
Benefits and coverage information are linked to each zone's average healthcare requirements and expenses. This guarantees that clients don't overpay for needless coverage while yet receiving sufficient protection.
How is Premium Calculated for Health Insurance Zones?
We live in a nation where cities vary from one another in many ways. These disparities may relate to the environment, the economy, or even the infrastructure. In addition, there are variations in the cost of living.
Additionally, the cost of medical bills differs from city to city, so zone-based health insurance is essential.
One major advantage of zone-based health insurance is that it reduces the premium paid for health insurance policies by 10% to 20%, which differs from policy to policy. Thus, people who live in lower-cost areas consequently benefit from the variation in health insurance.
For Example: If you are a resident of Delhi (Zone A city), you might have to pay up to Rs. 6,448 as a premium for insurance of Rs. 10 Lakh, which would have been available to you at around Rs. 5,882 if you were residing in Surat (Zone B city).
Zone-Based Premium Calculation with Example
Let’s understand how the health insurance premium works for different zones and clauses.
Assume Akash (age 27) has a health insurance policy and resides in Dehradun (Zone 2). For this policy, he pays a premium of Rs. 5000 for a sum insured of Rs. 12000:
Disclaimer: The prices mentioned above are indicative and may vary based on the standard health insurance plan chosen. Variation may arise due to zone-based pricing, co-payment clauses, or specific terms set by different insurers. Remember to read your policy document.
Change in the Policyholder’s Residence
Suppose you are a resident of Meerut, but due to work, you will have to relocate to Mumbai. So, if you are planning to buy a health insurance policy, you can avail yourself of the zone upgrade coverage and upgrade your zone from Meerut to Mumbai.
Since treatment costs are higher in Mumbai (Zone A city) than Meerut (Zone B city), the insurance company will adjust your premium payment accordingly and you will have to pay a higher premium.
Advanced Treatment Clause
Some insurance policies limit coverage when the policyholder moves from a Zone C insurance city to a Zone B or Zone A city insurance.
In such cases of zone-based health insurance policy, the insurance provider mostly levies a co-payment clause, where the insured individual has to pay a portion of their expenses incurred towards healthcare.
How to Upgrade to Zone-Based Health Insurance Plans?
Insurance providers like Digit Insurance offer zone upgrade add-ons that allow policyholders to avail the benefits of upgrading their health insurance policies according to the treatment costs in their cities.
For instance, if you are a resident of a Zone 2 city and have a health insurance policy suitable for covering the treatment cost in that city only, you can avail the Zone-Upgrade add-on to make it suitable for treatment expenses in Zone 1 cities.
With this upgrade, you can avail a higher coverage under your insurance policy if you wish to seek treatment at Zone 1 cities. You can simply opt for this add-on cover and get a zone-based upgrade to your plan.
Which Zone is Better: Zone A or Zone B?
When it comes to seeking competitive medical treatment, Zone A cities are preferred by most. Even though they are more expensive than Zone B, you can seek the most advanced healthcare in these cities. The cost of treatment in these cities is, thus, automatically higher than in the other zones.
Reasons why Zone A is Better than Zone B:
- Zone A includes high medical facilities and advanced technological treatments.
- It has a higher number of experienced doctors across various fields.
- Hospitals in Zone A provide a high standard of care and shorter waiting times.
- Zone A is better equipped with emergency wards and trauma care centres.
Even though Zone A is better in terms of treatment, it also means higher costs and premium payments towards the health insurance policy. But, this problem can be solved by simply availing the zone upgrade cover. You can simply upgrade your existing policy by paying an extra premium towards it.
What are the Factors That Impact Zone-Based Health Insurance?
Various factors affect zone-based health insurance premiums. Here are some of them:
- Cost of Healthcare: Medical expenses in metropolitan areas (Zone A) are generally higher due to advanced facilities and specialist availability, influencing premiums.
- Geographical Location: Zones are classified based on cities or regions; urban areas fall under higher zones due to their healthcare demand and infrastructure.
- Lifestyle-Related Risks: Urban zones are associated with lifestyle-related health issues, which increase the likelihood of claims and impact premiums.
- Access to Advanced Facilities: Zones with high-end medical technologies and specialists are costlier, reflecting higher health insurance premiums.
- Co-Payment Clauses: Some insurers introduce co-payment options based on zones, requiring policyholders to share a portion of the treatment cost in higher-cost zones.
- Zone Upgrades: Policyholders residing in lower zones may pay an additional fee to access treatment in higher zones, affecting the overall cost of coverage.
Is Buying Zone-Based Health Insurance a Good Idea?
Getting an add-on zone-based health insurance policy can be beneficial because it allows you to save a substantial amount on your premium payment for your healthcare policy.
But, it is important to look through the terms put forth by this provision of your healthcare policy to make sure that you are well-aware of what you are getting into!
So, research well, check through the policy terms and make your health insurance policy even more beneficial with the zone-based pricing provision!
Life is uncertain! You never know when personal or professional reasons might lead you to change cities. Health insurance zone upgrade ensures that your health is always safeguarded no matter where life takes you.
Choose wisely, and stay protected wherever you go!
FAQs about Zone-Based Health Insurance
Can I avail zone upgrade cover on an existing health insurance policy?
This condition is specific to the policies put forth by insurance providers. Sometimes, when the insurance company provides the add-on, they introduce a waiting period or other similar conditions. Read your policy document before proceeding.
Is the Co-payment clause beneficial for policyholders?
Even though the co-payment clause allows you to reduce premium payments, it can increase your financial liability during claim settlements. Thus, it is better to avail of a policy that does not impose this clause.
Is the zone-based classification of cities the same for all insurers?
No, the zone-based classification for the purpose of health insurance policy premium payment can vary between different insurance providers.
What Happens If Someone Switches Between Zones?
These days, people are always on the move due to both personal and professional obligations. In such cases, you can request a zone upgrade from your insurance provider. This might increase your premium by some percentage. However, you will be able to get treatment at any of your desired hospitals without worrying about the medical bills.
What is zone-based health insurance? Explain in simple words.
Zone-based health insurance categorizes cities into different zones based on healthcare costs, affecting premium rates. These zones are basically divided into 3 types: Zona A, Zone B and Zone C.
How are cities classified into zones?
Cities are typically classified into three zones on the basis of demographics, cost of living, cost of medical care expenses, etc.
How does living in a lower zone affect my premium?
The cost of living in the lower zone (zone B or zone C) is much less than in the higher zone (zone A). This reduced the medical bills and expenses related to hospitalisation. Thus, the insurance company charges lower premiums for such locations.
Can I upgrade my zone if I move to a higher-cost city?
Yes, most insurers offer a zone upgrade option, allowing you to adjust your premium based on the new city’s healthcare costs. This might increase the cost of your premium payment.
What is a co-payment clause in zone-based plans?
A co-payment clause requires policyholders to pay a percentage of the claim amount, which can vary based on the zone of treatment. Copayment is basically the amount a policyholder needs to pay during any treatment.
Are all insurers using the same zone classification?
No, zone classifications can differ among insurers. Different insurers classify the zone based on their terms and criteria. So, it's essential to check with your provider for specific details.
What happens if I need treatment in a different zone?
If you seek treatment in a higher zone, you may need to pay a higher premium or a co-payment, depending on your policy terms. Generally, the insurance providers charge a percentage of the co-payment amount if you undergo treatment in a higher zone.
Is zone-based health insurance suitable for everyone?
Yes, zone-based health insurance can benefit those living in lower-cost areas. Still, individuals frequently travelling to higher-cost cities should consider the implications of co-payments and upgrades or upgrades.
Can I switch to a zone-based plan if I already have health insurance?
Yes, many insurers allow you to switch to a zone-based plan, but it may involve some extra premium based on your current zone.
Are there any disadvantages to zone-based plans?
The only potential disadvantages of a zone-based plan include higher costs if you need treatment in a higher zone and the possibility of co-payment clauses increasing out-of-pocket expenses.
How can I find the best zone-based health insurance plan?
To find the best zone-based health insurance plan, you can:
- Compare different insurers
- Check their zone classifications
- Evaluate the terms of co-payments
- Upgrades to find a plan that suits your needs