10 Factors That Affect Your Health Insurance Premium Costs

In recent years, owing to the rising cost of medical treatment, there has been a significant rise in the number of people buying a health insurance policy. People are going beyond individual policies and are buying policies for their family to ensure they have a financial cushion in case of an emergency. Health insurance not only covers you during your difficult times but also offers you tax benefits. 

While approving your insurance application, the insurance companies generally conduct a thorough assessment of your health profile. Based on their review, they fix the premium charges. 

Factors influencing health insurance premiums

Every insurance company has specific guidelines based on which they decide the premium cost. Here is a list of things that they consider while determining the medical insurance premium:

Age –

This one of the critical factors that affect the premium amount. Generally, the insurance companies follow the rule of thumb - higher the age, higher the premium. Older people are more at a higher risk of suffering from illness than youngsters. So, if it advisable to buy a health insurance premium when you are young; you will give comprehensive coverage and better benefits at an affordable premium. 

Past Medical History –

Your past medical records are crucial in deciding the premium amount. If you have a history of suffering from illnesses or have a pre-existing disease, then your premium will be higher. But if you have had no illness and have a relatively healthy life, then your premium will be lesser.


Your nature of work and the amount of risk that you’re exposed to at work affects the premium charges. Suppose you work in a school, your premium will be less, but if you work in an environment like a construction site or a factory where the risk of being injured is high, then the premium amount will be higher.

Policy Duration –

The tenure of your policy also plays an important role. If you choose a policy with a longer duration, the premium will be less. This may not be the same for a policy with a shorter duration

Body Mass Index (BMI):

Premium rates are raised if you the customer has a high BMI. People with high BMI are at risk of serious ailments including heart diseases, type 2 diabetes, breathing problems, high blood pressure and cancer.

Smoking Habits –

According to a report published in Lancet, a medical journal, India has about 11.2% of the total smokers in the world. Smoking increases health risks, and the insurance companies view smokers as high-risk insurance buyers, and therefore charge high premium.  People who smoke pay high premiums as compared to non-smokers.

Geographical location:

The location where you stay determines your policy premium cost. For certain geographic locations, the premium rates are high due to lack of healthy food options, climate and health issues.

The Type of Plan You Choose:

Premium payments vary depending on the type of health insurance cover you choose. A group health insurance policy has a lower premium as compared to an individual policy.. Also, if you have purchased add-on covers, your premium will increase.  Individual or group insurance has low premium rate, while family floater has high premium rate. Again, the policy terms differ from company to company.

BMI – Body Mass Index –

Generally, people with higher BMI are charged higher premium than those who have a normal BMI. This is because people with high BMI are at a high risk of suffering from various diseases like diabetes, and heart-related problems, and therefore need regular medical care.

Coinsurance Feature –

While purchasing a health insurance policy, if you opt for coinsurance, your premium will be less. In coinsurance, for any claim, you pay a specific portion of the claim, and the insurance company gives the rest. This step reduces the premium amount significantly.

After considering all these factors, the insurance company uses the health insurance calculator to decide the final amount of the premium. You can also use any online insurance premium calculator to calculate the estimated premium. 

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