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How is the Premium for Health Insurance Calculated?

The most important aspect to keep in mind while purchasing a health insurance plan is the premium being charged on that plan. There are various other aspects as well, like the features of the plan or the claim settlement records of the insurance company and these aspects are also extremely important however the most important aspect to keep in mind would be the premium.

So how is the premium calculated? There is no doubt that the insurer chargers different premiums to different customers, depending on the kind of risk, the insurer associates with the customer but even beyond that risk, there are other factors which lead to the calculation of the premium.

Factors Affecting Premium:

The Family Size

Health insurance plans that cover the entire family are known as family floater plans. In such plans, the age of the eldest member of the family is considered while calculating the premium. The number of family members is also considered while charging the premium.


Insurance companies charge premiums on the basis of the set age bands, like 26 - 35 years or 36 - 40 years. The increase in the premium charged from one band to another can be anything between 30-60%.

Younger people are charged lesser premiums as compared to people falling in the older age bands because they are considered to be at less risk towards critical health problems and illnesses.

Body Mass Index

The body mass index is a ratio used to assess how healthy a person is, indicating if the person is underweight or overweight. It is calculated by dividing the weight in kilograms by the square of the height in meters.

Insurance companies expect the customers to undergo medical tests to check for any diagnosis of ailments such thyroid, obesity or even joint problems. If any of these ailments are found in the medical tests then the insurer offers covers.

Medical History

The premium to plans is calculated on the basis of the medical history of the customer and even his family. Insurance companies believe that a customer with a family history towards an ailment will be at greater risk to getting diagnosed with that ailment in the future. For this very reason, insurance companies charge a higher premium to customers having family histories with ailments like diabetes or blood pressure or even cancer.

Amount of coverage

A higher premium is charged by insurance companies for higher sums insured. There is of course the voluntary deductible that can be used by the customer to reduce the premium. However voluntary deductible also shows the amount that the customer will have to bear from his/her own pocket during claim settlement.

These were the key factors that play a big role when it comes to calculating the premium for health insurance policies.

An important tip for people while purchasing the right policy is that they should fill out all the relevant and honest information in their proposal forms, even if it would mean paying higher premiums so as to insure that there no discrepancies at the time of claim settlements.

Buying the right health insurance plan for yourself and your family members can be quite a challenge. Make sure you stay ahead of the game and beat this challenge by visiting the Bajaj Allianz website today to insure not only yourself but even your dear ones with the best in the industry.