Complete Process Of Health Insurance Premium Calculations

In times of medical emergency, a health policy comes as a life-saver covers us against unplanned medical expenditures, and acts as a buffer against financial worries. As a result, it is an indispensable part of our lives. Recently, we have witnessed a surge in the health insurance providers and plans available in the market. There is a vast market offering various products with different premium costs. Read More

A premium on health insurance is the amount of money you need to pay at regular intervals to keep your medical coverage running. Here, we discuss the complete process of calculating premiums for Health Insurance Plans.

A broad range of factors goes into finalizing the amount of premium applicable. In addition to this, there are company-specific guidelines that give you the final amount.

The generic list of guidelines followed by most insurance companies is as follows: 

  • Personal Medical History –

    The Insurance company considers the medical history of their customers, their family members, and their habits such as drinking, smoking, etc. All this information goes into the formulation of the final charges of premium. Generally, a person with smoking or drinking habits is charged a higher premium than those leading a healthier lifestyle. 

  • Profession –

    A lot depends on the type of work a customer is engaged in. The premium costs for a medical policy vary with the risk involved in a profession. For a heavy vehicle driver, the premium will be more than an office clerk—a company factors in various risk factors involved in your profession. 

  • Mortality Rate-

    Any customer eventuality is ultimately a loss to the insurance company. So, the company devises its premium amounts only after considering the mortality rates of different population groups. So we see that premiums for higher age groups are more than those of younger ones. 

  • Band Rating –

    The insurance companies group different populations into bands depending on age, gender, family size, geographical location, etc. As a result, all the customers, say in the 25-35 band, will be charged a similar premium. The companies underline that a common base rate will be charged from the same band. 

  • Modified Community Rating-

    Under this head, the insurance companies consider different community indicators. For insurance, the crime rate, industrial development, the population density of the region, etc. The company will factor community ratings to calculate health insurance premium amounts to be charged. 

  • Savings Part-

    As per the guidelines of the IRDA, a part of the premiums collected by the company is to be invested in security bonds. This is to secure them against market upheavals in the insurance sector. The Insurance companies factor these savings into calculating the premiums to be charged by the company. 

  • Marketing and Administrative Expenditures –

    The Insurance company also spends a significant amount advertising their products. All the costs to the company in marketing and administrative functions are also factored in while calculating the premiums. Their business runs on premiums with efforts to minimize the risks to their insurance plans. 

Thus, we can say that calculating a premium for Health Insurance Plans can be a tedious job, and most people generally go ahead with whatever amount the company quotes. But with online tools, you can now compare the costs of different insurance plans. 

Considering the number of factors that goes into calculating premium amounts, online premium calculator tools are a piece of cake. There are several online tools available in the market to get an estimate of the premiums to be paid for health insurance plans.

This allows users to 

  • Plan their finances accordingly
  • Compare the premium amounts of different plans in the market
  • Aware themselves of upcoming expenditures 
  • Know about the discounts offered by various companies
  • Compare the waiting period of different insurance companies
  • Benefits of starting at a younger age
  • Coverage offered under different plans

You can also get information regarding the number of claims resolved by a particular company. Niva Bupa Health Insurance is one of the leading market players in the health insurance segment. It also allows its users to calculate health insurance premiums online with the help of a few clicks. 

All you need to do is follow these steps. 

1 –  Login to the website of NivaBupa Health Insurance Private Ltd (earlier Max Bupa)

2 – Click on the Search for Plans option

3 – Enter your basic details like age, city, profession, coverage required, medical conditions (if any)

4 – Select the amount of sum to be insured 

5 – Click on Calculate Premium tab and Get the estimated premium for your Health Insurance Plan

A standard 18% rate of GST applies to all financial services. Add this to the annual premium amounts that the company needs to pay.

Understanding how insurance premiums are calculated will help you make an informed decision on the type of policy you should go for.

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