Wednesday, 6 March 2019

List of Factors that Makes Your Health Insurance Premium Affordable

Posted by MyInvestmentsPub
(Published on 07-Mar-2019)

Once you have made up your mind to buy health insurance, the next natural question would be, how to ensure the health insurance premium is affordable? There are several useful tools available, especially a health insurance premium calculator, which computes the premium payable for a given sum of cover, the tenure and the type of plan - individual or family insurance. In this article, we shall study the factors that impact the premium value.

Factors to be considered: 

There are several online quotes available, generated by health insurance premium calculators, by different general insurance companies for similar policies, depending on the risk profile of the insured. The risk profile comprises the information submitted in the application and the medical history of the applicant. 

Insurance companies compare these details with their in-house risk benchmark to decide on acceptance or rejection of the application. Once an insurer approves an application, they compute the value of the premiums and provide an estimated quote to the customer.

Just as the standards and assumptions of risk profiling vary from insurer to insurer, the risk metrics that affect the premium prices are also varied. The risk factors are broadly classified into:

1) Physical and medical risk factors: 

These are related to an individual’s health condition and include genetic factors. They are further broken up into:

a. Body Mass Index: People with high BMI are prone to several diseases of the heart, joints and are at high risk of developing diabetes. Generally, insurance companies charge higher premiums from applicants with higher than normal BMI.

b. Smoking habit: Insurance companies penalize smokers by charging higher premiums or rejecting the applications. Some plans include a clause to cover for smoke-cessation products as per doctor’s prescription. Stoppage of tobacco reduces health risk drastically.

c. Gender: Women are generally charged higher medical premiums than men. Experts opine that this is because women tend to visit doctors more often, take medicines and are at a higher risk of certain chronic diseases.

d. Age: Premium payments are usually lower for younger individuals. It is because young people are expected to have lesser diagnosed and undiagnosed health conditions than older people.

e. Pre-existing Medical Conditions: Insurance companies factor in the presence of a pre-existing medical condition, even if it is not covered. This is because the pre-existing condition may lead to other complications. Hence, some plans don’t accept applications from those with certain existing illnesses.

f. Family History: In case the applicant is from a family with certain ailments, the premium payments may be higher.

2) Lifestyle and personal risk factors: 

Insurance companies consider the correlation between lifestyle habits and health condition. Some of the factors are:

a. Profession: Applicants exposed to hazardous chemicals or radiation, work in dangerous roles, lead a sedentary lifestyle and undertake many international trips have to pay higher insurance premiums.

b. Zip Code: As per past trends it has been observed that those who live in a particular area tend to have similar risk profiles. Accordingly, insurance companies charge a higher premium from those in a same locality and where there is higher compliance of local laws.

c. Marital Status: Generally married individuals pay lower premiums with the saving being higher for men.

d. No prior health insurance plans: Health insurance companies would charge a higher premium from those with no prior record of health insurance. The insurer assumes that the first time applicants are in anticipation of health cover for medical ailments.


There is much truth behind the adage ‘Health is Wealth’. Taking good care of one’s health and controlling risk factors can ensure reduced health premiums. Further, selection of higher deductible option can help bring down premiums. One must carefully review the insurance quotes and ensure out of pocket expenses are kept to a minimum. It's critical to be insured against monetary losses from sudden medical emergencies. One may or may not use the medical policy or might realise that one has paid more than the amount claimed, however, the risk of being uninsured is far disastrous. So make sure to select the best health insurance policy for yourself and your family.


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