Health Insurance premiums - How they rise as you grow older?
Receiving ‘Employee of the Month’ award was common for Rahulas he is an expert in his job. His health insurance, however, was a different matter altogether. His relative lack of interest in his health insurance policy resulted in putting him in a dilemma. He wasn’t keeping up with the details of his health coverage and as a result, he had to pay much more towards the premium than he ideally should have.
Sounds a very plausible scenario, doesn’t it? Understanding the essentials of your health insurance policy, the coverage it provides, and its premium is something that you should do proactively.
If you bought a policy at the age of 25 and the premium increased by the time you were nearing 30, it is not without good reason. Read on to know why your health insurance premium rises with age and what you need to pay importance to:
Factors that affect Insurance premium
Health insurance premium primarily goes up because of two reasons:
- Rising age: With the increasing age, the probability of healthy problems also rises; thus the premium amount also goes up.
- Increasing medical costs: Factoring in the technological advancements in healthcare and inflation, the medical cost rises by 15% every year.e. doctors need to be paid more, medicines become more expensive, tests and medical treatments get more sophisticated & expensive; thus insurance companies increase the premium amount.
Apart from these two primary factors; the other reasons that affect health insurance premium include:
- Pre-existing medical conditions.
- Family medical history.
- Body Mass Index.
- Choice of the profession.
- Marital status.
- No insurance yet.
- Location of stay.
How is the insurance premium determined?
Understanding how the insurance premiums are determined can further explain why the premium amount rises every year. Here’s how health insurance premium is determined:
Each year, the insurer develops the profile of different patient types to determine the insurance premium cost. For instance, for the profile of male children aged 2 to 6 years, the insurer determines an average number of doctor visits, or vaccinations each child will need. In another profile of women falling within the 45 to 55 years age bracket, the insurer determines the number of checkups, mammograms, perhaps a colonoscopy or a bone scan a woman would need based on health history.
The insurer also takes into account certain surgeries, medical tests, accidents, and other medical needs for each profiled patient. By briefly analyzing these profiles, the insurer can estimate what its costs will be.
How to reduce the cost of health insurance premiums?
Now that you briefly know how the cost of the premium is determined, it is better to look at the various ways that can help reduce the cost of health insurance premiums.
- By staying updated on the various health insurance regulations passed by the IRDA
- Investing in family floater policies allow you to pay the lesser overall premium as a family
- By staying healthy and having a less chequered medical history
- Changing insurance companies to avail less expensive premiums
- By avoiding a Health Insurance Policy with a Claim Holding
- By opting for a Policy with High Top-up/Deductible
- By closely considering the company's policy of raising premium rates in a particular age group
Medical emergencies always come unannounced and can wipe off a considerable chunk, and in some cases, your entire savings. So while paying your health insurance premium on time is always a good thing to do, augmenting your knowledge about how health insurance works can be of great benefit. That way, you do not only buy and maintain health insurance that meets your health needs but also stay well-informed about how the policy premium is going to vary across your lifespan.
**To understand exactly about the policy coverage, exclusions, etc read the Policy Wordings carefully.**