Deciding factors in the process of health insurance premium

Posted on June, 2021

Medical inflation is becoming a pressing issue, with medical expenses skyrocketing with every passing day. Health insurance policies have established themselves as the most vital addition to one’s portfolio if a family wants to cover high medical expenses without having to spend from their own pockets. However, most people avoid buying insurance policies due to the myth that every insurance policy comes with a high premium amount that can create a financial burden over time.

Knowing the truth is to understand what factors decide the premium amount and how you can enjoy their benefits without paying a high premium amount.

The Premium Deciding Factors

Here are the factors that are vital in deciding the premium amount of any insurance policy:

  • Sum Assured:

    Sum assured is the total insurance cover that the policyholder gets after purchasing the insurance policy. In case the insured event takes place, the insurance company pays the sum assured amount to the policyholder. For any insurance policy, the premium amount increases with the sum assured amount.
  • Age:

    Age is a vital factor in deciding the premium amount. As younger people are at low risk of being diagnosed with a life-threatening disease, premium for health insurance policies are lower for a younger policyholder.
  • Pre-existing illness:

    As medical expenses can increase for people who are already battling an illness, their premium amount can be higher than the people who are healthy with no illness. Many insurers may not underwrite Insurance policies if a person is already battling with a critical illness. However, there are specific insurance policies designed for people who have common pre-existing conditions like diabetes, hyper tension, thyroid, heart care.
  • Policy Tenure:

    The tenure of the policy plays a crucial role in deciding the premium amount. Choosing a policy for multiple year coverage, you can avail premium discounts from various insurers. Many insurers offer 5% to 10% discount on premiums if Insured is opting for 2 year or 3 year policies in one go.
  • Type of Insurance Policy:

    The premium amount depends on the type of policy and the benefits it offers. As health insurance policies offer comprehensive benefits and protection features to the policyholder, their premium amount is slightly higher because of being at par with the offered protection.
  • No Claim Bonus:

    Many Insurance companies offer discounts on the renewal premium from 5% to maximum 50% or increases the sum assured of the policy from 10% to 100% as a reward to the policyholder for not making any claims. Usually these rewards are given for every consecutive claim free year.

How can you reduce your premium?

A policyholder can consider these factors before buying an insurance policy to lower the premium amount:

  • Consult an Insurance Broker:

    Insurance brokers are vital in analysing your current financial situation, insurance needs and recommend the best-suited insurance policy. It is always wise to buy an insurance policy after consulting with the insurance experts of the broker to avoid unnecessary features and keep the premium amount low and affordable.
  • Higher Deductible:

    Deductible is the amount that the policyholder has to pay before the policy features start to be applicable. The insurance company is only liable to pay the claim amount that exceeds the deductible amount. For example, if the deductible is Rs 50,000 and the claim amount is Rs 60,000, the insurance company will only pay Rs 10,000. Furthermore, the premium amount is less for policies with higher deductibles.
  • Family Floater:

    A family floater policy is where all family members are covered under the same policy. The policyholders can use the whole sum assured for the treatment of a single family member. Family floater plans come with a considerably lower premium than individual insurance policies.
  • Top-Up plans:

    Top-up plans allow the policyholder to claim a higher amount than the basic sum assured of the policy. A top-up plan is much more affordable than increasing the basic sum assured of the policy, which results in increasing the premium by a hefty margin.

An ideal insurance policy considers every insurance need of the policyholder and yet offers the features at an affordable premium. If you are looking for such insurance policies that are comprehensive and affordable, PINC Insurance is the ideal insurance platform that offers best-in-class insurance products. To consult with our expert relationship managers and buy the most suitable policy, you can visit us at PINC Insurance.