Buying a health insurance policy is one of the most practical ways of accessing the best medical facilities while coping with the dramatically-rising healthcare costs. Health insurance also offers tax benefits. Nowadays, consumers prefer purchasing family health insurance plans to have a safety net during medical emergencies affecting any member of their family. The insurance premium is a crucial criterion for most people when choosing an insurance plan. The guidelines of every insurer for calculating the insurance premium may vary. Here are eight key factors that affect the cost of family health insurance policies:
1) Age
Age is one of the most crucial factors influencing your insurance premium. As a general rule, the younger you are, the lower the premium. Typically, people in their 20s or 30s are less vulnerable to contracting illnesses than those in their 60s. The former also recover faster. Ergo, it’s ideal to purchase a health insurance policy when you’re younger. When looking at health insurance plans for your family, consider buying a senior citizen policy for any of your family members who are more than 60 years old.
2) Pre-existing illnesses
A few insurance companies require customers to undergo a medical check-up before finalising the premium to verify the presence of pre-existing conditions and determine the risk associated. While some insurers allow pre-existing illnesses but enforce a waiting period, some reject the application altogether. You may also find insurance providers who provide coverage for such conditions without a waiting period but charge a higher premium.
3) Occupation
While no one can be denied health insurance coverage based on their profession, the nature of your occupation plays a minor role in determining your insurance premium. People exposed to risky elements in their line of work such as members of the armed forces, construction site employees, individuals exposed to radiation/hazardous materials, or the like have to pay a higher premium than someone working in safer environments like schools. This is for the simple reason that individuals working in high-risk environments are more likely to suffer from life-threatening illnesses.
4) Sum insured
Sum insured refers to the maximum amount you can claim during a medical emergency. A higher sum insured means a higher policy premium. However, having a health insurance policy with a high sum insured is helpful during medical emergencies as you have better financial safety. This is another reason that makes group insurance policies such as those for families better since the sum insured of individual health insurance is usually on the lower side.
5) Smoking habits
Smokers are more prone to making health insurance claims as they are at higher risk of developing chronic lung diseases, infertility, and the like. Considering these factors, insurance companies charge a higher insurance premium from smokers than non-smokers, irrespective of their gender.
6) Body mass index (BMI)
Typically, people with a higher BMI have to pay more for health insurance than those falling in the normal BMI range. The reason is that the former are more prone to suffering from illnesses, such as heart-related diseases, diabetes, and the like, and consequently, require regular medical care.
7) Policy duration
The tenure of your health insurance policy also affects your premium. A long-term health insurance plan—valid for 2-3 years—is likely to cost less than a regular annual one, which is valid for a year. Long-term health insurance policies eliminate the need for frequent renewal and come with discounted premiums.
8) Coinsurance
Coinsurance is a fixed portion of treatment costs that the policyholder must pay from their pocket after covering the deductibles. For instance, if the coinsurance is 20%, you must bear 20% of the treatment cost, and the insurer will cover 80%. Coinsurance helps protect insurance companies against large claims.
The insurer decides the family health insurance premium after considering how all these factors affect all the members of the policyholder family. However, you can get an idea about your family health insurance cost by using online premium calculators. Visit your preferred insurance company’s website to find out your estimated premium.
