The healthcare industry is one of the largest sectors that contribute to the overall economy. Undoubtedly, cost of certain treatments has doubled within 5 years. Also, the healthcare inflation is alarming at 14% every year, which is amongst the highest globally. You may have noticed your health insurance premium increasing every year, and that is something that can leave you perplexed. While being without health insurance coverage can be a costly mistake, there are some things that you can do to keep your health insurance premium under check.
Let us first try to comprehend a little more about the health insurance premium, what it is, what factors affect it, and what causes insurance premiums to increase. Read on.
Understanding Health Insurance Premium
The health insurance premium is the charge you pay, typically on an annual basis, to the health insurance company in exchange for the medical coverage that they offer you. While there are variations in the features of every policy; the higher the coverage, the more the premium.
Factors Affecting Health Insurance Premiums
Health insurance premiums are decided by evaluating various factors. One of the key reasons for this is medical inflation. Especially after COVID-19, the cost of healthcare services, as well as consumables, has spiked, leading to a further increase in overall medical bills.
Individual differences can also play a role in determining your premium. For the same health insurance plan, the premium for you may be different from that of your friend or spouse. This is because age, location, previous health insurance history, and the overall health of the insured play a key role in deciding the premium. When discussing what causes insurance premiums to increase, one question that might pop up in your mind is, "does health insurance premium increase with age?"
The answer is YES!
Well, there are certain reasons that can lead to alterations in your health insurance premium. Let's discuss them all.
What Causes Insurance Premiums to Increase?
There are various causes that could lead to an increase in health insurance premiums on every renewal such as:
1. Healthcare Inflation
Did you know that medical inflation in India is the highest in all of Asia?
Healthcare inflation is a matter of concern since a rise of 14% in medical costs every year poses a serious threat. So, if you are wondering, "Does the health insurance renewal premium increase every year?" the answer is yes. Owing to inflation, health insurance premiums also increase in order to cope with the rising costs.
2. Health Insurance Claim History
While the purpose of buying a health insurance plan is to raise a claim in case of a medical requirement, you may wonder, "Does health insurance premium increase after claim?". Well, certain health insurance providers may increase the premium after a certain number or amount of claims registered. For more clarity on this topic, you must refer to the policy documents or directly ask your insurance provider about how much the insurance premium increases after an accident claim or after raising a claim.
3. Your Age
You must be aware that health insurance premiums increase with age. This is the reason why purchasing health insurance at an early age is highly recommended. People aged 60 or above are most likely to see an increase in their health insurance premiums every year while for younger people, premium is likely to rise only after a certain year in slabs of 5 years.
Did you know that for a 25-year-old male, a basic health plan of ₹5 lakhs would cost around ₹6563 a year? Whereas if the same individual buys a plan at 40s, his annual premium would be ₹7,900. So, by the time you reach 60, your premium can be almost 400% of the cost of that in your 20s.
It is true that you are less vulnerable to illnesses at your young age. But that doesn’t mean you should postpone your health insurance till you “actually” need it because you never know when you really need it most. The earlier you opt for it, the higher the chance is for your policy to get issued without any exclusion!
4. Changes in Benefits
If you choose to change the coverage or opt for a higher sum insured, the health insurance premium is likely to rise. At the time of renewing the policy, you can make changes in the policy as per your changing needs. Opting for add-ons will also increase the premium.
Note: The premium of your policy does not increase proportionately. If a health plan of ₹5 lakh costs you ₹8,000, a ₹10 lakh could cost around ₹12,000.
5. Your Overall Health
The overall health of the insured plays a key role in deciding the health insurance premium. In case the insurance seeker is diagnosed with an illness or serious disease, the insurance premium may be increased. Also, if someone has a habit of consuming tobacco or intoxicants, there are strong chances of an increase in the health insurance premium. On the other hand, good health helps in managing the premium. Some insurers also incentivise people to stay fit by providing additional benefits or a reduction in the premium.
Your BMI and body Mass Index can also significantly affect your premium. Increasing BMI can trigger health issues like cardiac issues, diabetes and joint problems, putting your health at risk, thus promotes an increased premium.
Did you know that your family medical history can also influence your premium? People with a serious ailment running in their family may end up paying a higher premium.
>> Also Read: How to Make Health Insurance Premium Payment Online
How to Reduce Health Insurance Premium?
Once you know why health insurance premium increases, it becomes easier to have control over it. Yes, you have ways to lower your health insurance premium. Here are 6 tips on how you can reduce health insurance premiums amid the rising healthcare inflation:
1. Renew Your Plan on Time
Health insurance plans are purchased for a specific tenure. To continue the services and benefits, it is mandatory to renew the policy before it expires. Not only does it offer you uninterrupted services but also a chance to avail of various discounts and offers. It helps you reduce the health insurance premium.
Pro Tip: Renew your policy on time so that you do not miss out on any accumulated benefits.
2. Buy what You Need
With time, your medical requirements may change. The current sum insured may seem less or too much. In such a case, it is best to change the coverage at the time of renewing the policy. It ensures you pay for what you actually need.
Pro Tip: If you have immediate dependents, make sure to invest in a family floater policy that offers coverage to them, too.
3. Be Smart when Raising a Claim
Cumulative bonus or no claim bonus (NCB) is a huge benefit when it comes to paying health insurance premiums. When you raise no claim in a policy year, you are rewarded for good health with NCB. You can enjoy up to 50% off in the next premium. NCB can be maintained even when you plan to change your insurer.
Pro Tip: Avoid making claims for smaller/ cheaper treatments. If your policy offers an NCB, try to make the most of it.
4. Choose the Add-ons Wisely
Add-ons are the additional coverage that you purchase along with your health insurance plan. Each add-on increases the premium. So, it is essential to review the use of add-ons from time to time. If you find that you no longer need an add-on, you may drop it in the next renewal so you do not pay unnecessarily.
5. Be an Early Investor
When you buy health coverage at a young age, you are more likely to get benefits such as cheaper premiums, better coverage, preventive care, financial security, a longer duration of tax benefits, etc. Remember, the younger you are, the lower your chances of a policy rejection.
Pro Tip: Every health plan comes with a waiting period. When you buy at a younger age, you will typically be able to serve the waiting period for illnesses that generally come with age.
6. Stay Healthy and Positive!
Staying healthy is not only the key to a long and happy life but also helps save a lot. Good health never goes unrewarded. Your claim history and health history are one reason behind the change in the health insurance premium. For maintaining a good health, your insurer will definitely charge a low premium.
Over to You
Amid the rising costs of medical care, it is very important to have a health insurance policy so you don't exhaust your savings. Depending on your requirements, you may get separate health insurance plans for everyone in the family or a family floater plan. One widely asked question is, "Does the health insurance renewal premium increase every year?".
The answer is yes and no. Yes, as in the premium could increase every year due to some inevitable reasons, like rising prices and healthcare inflation. However, you can definitely act smart to reduce the premiums. Make sure to choose the right plan and also renew on time to avail yourself of discounts and other offers.
Also, there is no guarantee that the premium would surely increase for every policyholder every single year. There are multiple factors that the insurer considers while fixing the premium for a specific age-group!
At Care Health Insurance, we aim to offer the most affordable and comprehensive health insurance plans to our customers. Pick the plans as per your need, and let Care be your health partner. We wish you good health!
Disclaimers: The above information is for reference purposes only: Policy Assurance and Claims at the underwriter's discretion.
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