• How is the premium charges for health insurance determined

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    If you are someone looking for a health insurance plan, you may come across a good number of health insurance companies in the market. The number of health insurers in the market has increased significantly over the last two decades. This has fueled a healthy competition among insurance companies and made health insurance more affordable to everyone. The premium charges of health insurers are likely to vary from one company to another. Also, the premium charges are likely to vary from one person to another. This is because of the factors that influence the cost of insurance. Let’s take a look at these factors in detail.

    Factors that influence health insurance premium

    The following factors play a major role in the premium amount charged by health insurance companies:

    • Age of the insured: Health insurance premiums cost a lot lower if the entry age of the person is low. A person entering a cover at 25 years of age will have a significantly lower premium charge compared to a person entering a cover at 35 years of age. The main reason behind this is that the risk factor associated with medical insurance increases as a person ages. All health insurers in the market adjust their premiums accordingly to cut down their losses.
    • Family medical history: People with a family history of medical illness typically pay higher premiums than others. The obvious reason is that these policyholders are at a higher health risk. Hence, the claims made by them tend to be significantly higher. If conditions like diabetes, cancer, hypertension, heart diseases, etc. are common in your family, you may have to shell out a little extra on premium charges.
    • Pre-existing conditions: Even if there is no significant family history of medical illness, the pre-existing conditions of a person may influence the premium amount charged by an insurer. If you have a history of heart ailments, diabetes, kidney ailments, etc., you may have to pay higher premiums even if the diseases are already cured.
    • Location: Location is another major factor that insurers consider when determining the premium charges. This is mainly because the cost of healthcare does not remain the same everywhere. Hospitals in tier-I cities are more expensive than those in tier-II and tier-III cities. The premium charges are adjusted accordingly for people living in different regions of our country.
    • Body mass index (BMI): The weight of a person is often equated to his/her health conditions. Overweight and obese people are prone to various diseases like diabetes, hypertension, heart ailments, kidney ailments, etc. Hence, health insurance premiums cost higher for people with high BMI.
    • Smoking habits: It is no secret that smokers are prone to various lung and respiratory disorders. Moreover, the risk of cancer is extremely high among tobacco users. Considering this, most health insurers charge higher premiums for smokers. If you are a long-term tobacco user, you may have to pay high premium amount until you start following a healthy lifestyle.
    • Choice of profession: There are certain professions that are deemed hazardous by health insurance companies. For instance, the physical risk faced by a construction worker is significantly higher than that of a school teacher. Insurance companies factor this in while calculating the premium charges. Also, there are companies that set specific limit on sum insured based on the choice of profession.
    • Marital status: Though there is no concrete proof that married people are healthier, many insurance companies seem to believe so. Married men are considered to be the main beneficiaries here.
    • Newly insured people: If you are not previously insured under any health insurance plan, you may have to pay higher premium charges. Insurers believe that newly covered members will make frequent trips to the hospital in order to take full advantage of their health insurance plan. This is the main reason behind the high cost of insurance in this case.

    In the past, gender used to be a factor in determining the premium amount for health insurance. However, it has become illegal in many countries to charge different prices for men and women. In India, most of the top insurers charge the same price irrespective of the gender.


    The factors mentioned above play a major role in determining the premium amount charged for health insurance. You can bring down the cost of insurance by following a healthy lifestyle. There are insurers in the market that provide premium discounts based on the activities and food habits followed by the insured. Also, don’t forget to do your research before subscribing to an insurance policy.

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