The primary role of a health insurance policy is to protect the insured against different kinds of medical threats and the financial issues associated with them. Choosing a health insurance policy can be a daunting task especially when there are about 30 players operating in the market. The cost of health insurance plays a major role when it comes to narrowing down policies from the long list of health covers available in the market. Using a health insurance premium calculator, it is possible to determine the premium amount for a policy before making a decision. Before we look at the significance of a premium calculator, let’s take a look at the factors influencing health insurance premiums.
Factors Influencing Health Insurance Premiums
Health insurance does not always charge a fixed amount for all policyholders. The price of a health insurance policy may vary based on multiple factors. Some of these factors can be listed as follows:
Age: Health insurance premiums get costlier as the insured person ages. This is mainly because the risk of health issues become higher as the age of a person increases.
Location: People living in certain locations may have to pay higher premiums than people in other locations. Factors like network hospital accessibility, local regulations, taxes, etc. may also influence the difference in price based on locations.
Pre-existing conditions: It is better to declare your pre-existing conditions beforehand in order to avoid any issues during a claim. Based on your pre-existing conditions, premium loading may be applied on a policy.
Profession: Policyholders may be categorized into different risk levels based on their profession. Based on the risk level of a particular profession, appropriate premium loading may be applicable.
Family size: In case of family floater policies, the size of a family will be taken into consideration while determining the premium charges.
How Companies Determine Premiums for Health Insurance?
Health insurance companies have their own mechanism for determining the premium amount for their different policies. Some of the common factors that every company takes into account while determining premium for a specific policy can be given as follows:
Expenditure: The total expenditure incurred by a company is the first thing considered when it comes to determining the premium amount. This may include operational costs, advertising costs, marketing costs, management costs, broker commissions, etc.
Health History: For people over a certain age group, all companies require pre-insurance policy checkup. This is to ensure that the person is in good health condition. In addition to the existing health condition, the company will also consider personal habits like smoking, drinking, physical activity, etc. while determining the cost of an insurance policy.
Policy Underwriting: A health insurance company typically offers policies suitable for individuals, families, and groups. Insurance companies underwrite policies in such a way that a balance is maintained based on the risk level of these policies.
Savings and Investments: Insurance companies typically invest a portion of the premium amount in investment schemes as per the guidelines dictated by the IRDAI. The returns generated from these investments are also taken into account while determining the premium charges for a policy.
Mortality Rate: This refers to the cost borne by a health insurance company in case of an eventuality to the insured person. Based on this consideration, the cost of a health insurance plan is higher for individuals and families belonging to the higher age group.
Benefits of Health Insurance Premium Calculator
Now that we know how the premium is calculated for a health insurance policy, it is essential to know the benefits of using a health insurance premium calculator. Most of the top insurance companies in the market have online health insurance premium calculators on their official websites. Once you key in the required details, these calculators will determine the cost of a specific health insurance policy. Some of the key benefits are listed as follows:
- Budget Planning: By knowing the premium charges through a health insurance premium calculator, you can plan your finances in a better way. You can also check the different sum insured options available for the amount you can afford.
- Time Saving: Calculating the premium amount for every single policy is a cumbersome task. Without a premium calculator, you may have to estimate the premium charges manually based on the factors mentioned above. Alternatively, you may have to wait for the company to respond with a quote. A premium calculator helps you save all these troubles by letting you know the premium amount instantly.
- Easy Comparison: With the advent of online health insurance policies, most people now prefer to buy their health insurance policies online. To proceed with the purchase, it is essential to compare the policies from different service providers in the market. By comparing the policies in the market, it is possible to choose the best policy available based on one’s requirements.
Tax Benefits on Health Insurance Premiums
The premium amount paid for health insurance is eligible for income tax relief as per Section 80D of the Income Tax Act. Tax relief can be claimed for individual policies as well as family floater policies. Some of the key tax benefits available with health insurance can be given as follows:
- Under Section 80D, income tax relief for up to Rs.15,000 in premiums can be claimed for health insurance plans for self, spouse, and dependent children. If the policyholder is over 60 years of age, tax relief can be claimed for up to Rs.50,000.
- The Union Budget 2018 increased the deductible limit for senior citizens and very senior citizens to Rs.1 lakh.
Tax benefit is one of the added advantages of investing in a comprehensive health insurance plan.
How to Use the Health Insurance Premium Calculator?
When it comes to determining the premium amount, it is better to use a third party aggregator like Bankbazaar to check out the different types of policies available in the market. Using the health insurance premium calculator at bankbazaarinsurance.com is very simple and straightforward. The process can be given as follows:
- Go to the ‘health insurance’ section of bankbazaarinsurance.com
- Click on the ‘Apply Now’ button
- Choose the location where you live
- Choose the number of adults and children in your family
- Select the age of the oldest member in the family
- Select if any health insurance cover is provided by your employer
- Provide your contact information including email and phone number
- Click on ‘Check Best Premiums’ once you have entered the details
This will list out the best policies available for you. Based on the premium amount listed in this section, you can select a policy and get access to affordable health insurance plans within your budget.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.