What is Premium in Health Insurance?


What is Premium in Health Insurance?

The importance of having health insurance is often realised when a medical emergency occurs that can cost you heavily. A health insurance plan ensures you can afford the best available healthcare facilities. Primarily, as an insured, you are transferring your health risks to an insurance company that offers various coverage against health crises. In return for this risk coverage, the insurance company charges you a premium.

Read on to know what is premium in health insurance and the various factors that make your health insurance premium pocket-friendly.

What are Premiums on Health Insurance?

The health insurance premium is the amount paid by the insured/ policyholder, to the insurance company in return for the coverage offered under a health plan. Simply put, it works like an annual subscription for which you have to pay a premium. Let's understand in detail what is medical insurance premiums.

Depending on the chosen health plan and the terms of the insurance company, the premium has to be paid either monthly, quarterly, half-yearly, or yearly or one-time for a multi-year policy. In order to continue availing the services of a health insurance plan, you need to renew the plan before it expires. By paying the premium amount on time, your health insurance plan remains active, thus, offering you the much-needed medical insurance coverage, along with some other benefits as well.

There are different types of health insurance plans available: individual health insurance, family health plans, senior citizen health insurance, maternity coverage, and so on. The earlier you invest in a health insurance plan, the higher your chances of getting better coverage and affordable premium rates.

Factors Affecting Health Insurance Premium

The premiums on health insurance may differ from person to person. To understand what is the premium in health insurance, you also need to know about the factors that affect health insurance premiums, like:

1. Type of Coverage

There are different types of health insurance available, and you may choose one that meets your needs. Depending on the chosen plan coverage, the premium also differs. Typically, the more coverage, the higher the premium you need to pay.

2. Add-ons Purchased

Apart from the basic coverage of a health insurance plan, you may also extend the plan by investing in certain add-on covers. Usually, add-on covers are available with almost all comprehensive health insurance plans. For each add-on, an additional premium is charged.

3. Sum Insured

The sum insured is the amount up to which you can avail of medical coverage under a health insurance policy. The higher sum insured indicates a higher premium and vice-versa. For instance, a health insurance plan with ₹50 lakh means higher premium than a policy with ₹5 lakh sum insured.

4. Age

The age of the insured affects the premium of the health insurance plan. The older you get, the higher the premium  you pay. This is primarily because growing age may increase the chances of health problems, so the possibility of claim.

5. Medical History

The medical history of an individual also directly impacts the health insurance premium. For instance, an individual with pre-existing diseases like diabetes or hypertension may have to pay a higher premium.

6. Lifestyle Habits

Various lifestyle habits may also trigger a higher health insurance premium. These may include smoking, alcoholism, and so on.

7. Co-payment

Co-payment is a clause in health insurance plans where a fixed amount or percentage of the claim amount has to be paid by the insured. For instance, suppose you choose a co-payment of 10%. When you make a claim of ₹1 lakh, then ₹10,000 has to be paid by you (the insured). So, a higher co-payment means a lower health insurance premium and vice-versa.

>> Also Read: What is Cumulative Bonus and Cumulative Bonus Super under Care Health Insurance?

How can You Calculate Your Health Insurance Premium?

You may want to know what is the average cost of health insurance per month. To calculate the health insurance premium, you may use a health insurance premium calculator. It is an online tool that lets you quickly calculate the premiums on your health insurance within a few clicks. The process is as follows:

  • Click on the health insurance premium calculator
  • Enter your mobile number to get the quote
  • Now enter other details like your email and pin code to proceed
  • Enter details of all the members you want to insure
  • Select the type of policy you want and the sum insured
  • Click on calculate. The calculator will show the result as per entries made, including 18% of GST.

Know How to Reduce Your Health Insurance Premium

While having health insurance is crucial, paying the premium may seem to be a little toilsome. Worry not;  these tips will help you reduce the premium on your chosen health insurance. Let's understand how:

1. Make a Smart Purchase

When you buy a health plan, you must buy one that fulfils your health insurance needs. Make sure you understand the coverage and choose a plan that suits your needs and your budget.

2. Buy a Plan at an Early Age

At young age people are less vulnerable to illnesses. So, if you buy a health plan at an early age, the premium charged is usually low.

3. Choose Add-on Covers Wisely

When deciding on a health plan, make sure to pick the coverage that you need. Do not go for unnecessary add-ons or extremely high sum insured if you do not need it.

4. Avail of Discounts and Offers

Many times, health insurance companies offer discounts, especially during festivities. Getting a policy at this time can be advantageous. Also, renewing a policy on time may help you get various offers.

5. You may Choose Higher Deductibles

Choosing a higher deductibles/co-payment means you have to pay a lower premium. So, do a thorough analysis and decide on deductibles that best suit your needs.

6. No Claim Bonus (NCB)

No claim bonus is a reward offered by health insurance companies to the insured who do not raise any claim during a policy year. You may use NCB to get discounts during policy renewal. You may get up to 50% discount on premium using NCB, depending on the plan option.

7. A Healthy Lifestyle

Your lifestyle and habits may directly impact the premium of a health insurance plan. Quit smoking and other intoxicants today to not just avail a lower premium but also to lead a healthy life ahead.

To conclude

A health insurance plan has become a basic necessity, considering the increase in medical care costs and the rising number of diseases. Now that you know what is the premium on health insurance, you may also be aware that premium plays an essential role in your chosen health insurance plan. Hence, you must decide a plan that comes under your budget and also meets your needs. By considering the factors affecting premiums, there is a possibility you can lower your payout.

Disclaimers: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.


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