National Center for Biotechnology Information (NCBI) concluded that average annual medical insurance cost for an individual is around INR 1,713; this price could increase by 24% if branded drugs are used. If one is wondering “how much does health insurance cost per month”, the answer would be somewhere around INR 143.
Let’s learn about different medical insurance policies and see which factors affect health insurance price lists available online.
Types of insurance plans
There are several different policies offered by insurance providers befitting the needs of different people. Some of the common plans are as follows:
- Individual health insurance plan
As the name suggests, this policy covers medical expenses for an individual. Many people who are untied to the responsibility of family members often choose this type of insurance plans. People who are 18–65 years old are eligible for an individual medical insurance plan.
- Family/floater health insurance plan
This plan provides coverage for the medical expenses of all the members of a family with a common assured sum. For a family medical insurance, the age of the eldest family member is considered while calculating the policy premium.
- Senior citizen health insurance plan
People who are above the age of 65 years are generally not be eligible for buying individual health insurance. A health insurance plan for senior citizens provides coverage for pre- and post-hospitalisation expenses for the elderly at slightly high premium rates than the two policies.
- Disease-specific health insurance plan (cardiovascular ailments, diabetes, and COVID-19)
The increasing number of people with life-long diseases, such as type 2 diabetes and heart conditions, in India has led to the creation of some dedicated insurance plans. Under these policies, policyholders can start claiming expenses within 3 to 4 months (this period may vary from company to company) from the date of purchase. Most companies offering this policy provide the option of lifetime renewability as well.
New additions, like Corona Kavach, were made after the recent pandemic. These additions offer coverage for consumables, such as masks, gloves, and PPE kits.
- Group health insurance plan
Multiple companies have started taking the health and welfare of their employees seriously, prompting a group medical cover (GMC) for people in an organisation. Depending on the employer, a GMC policy also offers the option of including family members in the plan at additional charges.
- Top-up health insurance plan
If at any given time, the policyholder feels the need to increase the assured sum, they can do so by adding a top-up health insurance to their existing plan. The benefits automatically get activated once the maximum claim amount has been utilised.
- Mediclaim insurance plan
This is a basic plan, which usually is ideal for people who are looking for only in-patient department (IPD) expenses. A mediclaim policy covers hospitalisation expenses for the treatment of accidental injuries or illnesses.
- Health insurance for people with disabilities (PwD)
Dedicated medical insurance policies are available for PwD according to their disability levels. Few government policies options—Swavlamban and Niramaya—are also available for people.
Mediclam policy prices can differ with the type of plans.
Health Insurance Riders
To add more flexibility to health insurance plans for further personalisation, health insurance riders are introduced. These rides are basically additional coverage that can be availed at extra costs. Here’s a list of most common health insurance riders:
- A maternity cover rider covers the expenses related to childbirth, pre- and post-natal treatment, and sometimes baby care too.
- Critical illness riders are ideal for those who have been recently diagnosed with a severe medical condition, such as heart attack or cancer, during policy tenure.
- Personal accident riders provide compensation in the case of an accidental injury leading to disability or death.
- Hospital cash riders provide a fixed daily cash allowance for miscellaneous expenses during hospitalisation.
- Room rent waiver is used by policyholders to upgrade the hospital room as per their choice without worrying about additional costs.
How are medical insurance premium rates calculated?
Health insurance companies follow set guidelines to come up with a policy premium for every individual. Similar to any other product sold in the market, medical insurance prices are also calculated by considering business costs, including marketing and operations.
Here’s a list of components that contribute to determining policy premium rates:
- Service and marketing expenses
A large chunk of money goes into designing, marketing, and advertising a medical insurance plan. Other expenses including commission, brokerage, brochure creation, and salaries are also recovered from policy premiums.
- Savings and investments
Health insurance companies are institutions that deal with financial tools; they invest their capital in the public sector to gain profits and deliver the promised assured sum to policyholders. The health insurance premium for a policyholder is subject to the returns from such investments.
Every investment made by insurance providers follows the Insurance Regulatory and Development Authority (IRDA) of India. Investments in the private sector are generally avoided due to high risk involved in such investments.
- Policy underwriting
Every individual has their own health risks, which are directly proportional to the number of times they will raise claims in the future. Health insurance companies assess all the possible risks associated with an individual from different angles and consider a wide range of likely events before determining a policy premium. Based on this evaluation, eligibility criteria and claim clauses are decided for different health insurance policies.
- Mortality rate
Health insurance companies have to pay out an assured sum to a policyholder or their family members in case of the policyholder’s eventual death. Mortality rate is considered high in the case of elderly customers as they are more prone to life threatening diseases including cardiovascular ailments.
Insurance premium calculator
As an online tool based on a matrix developed by years of research, health insurance premium calculator allows people to get a rough answer to—how much does health insurance cost—simply by entering few details in the tool. One can easily find multiple premium calculators on the internet that use a person’s age, sum insured, number of people covered under a plan, policy tenure, additional riders, etc. to calculate a basic policy premium price.
This effective tool also enables a person to compare multiple policies at once conveniently by compiling a comprehensive health insurance price list, and then, the person can choose the best suitable option according to their needs. By having an idea of the policy premium prior to buying health insurance, people can better plan their finances. In addition, a health insurance premium calculator will also share available discounts.
Factors affecting health insurance price list
Even when the insurance company has created a standard policy with a tentative premium amount, the answer to—how much does health insurance cost per month—is not always straightforward; it depends on multiple factors:
- Type of the insurance plan and infrastructure
Higher the coverage, higher the premium. How much medical insurance price will the person have to pay depends on the type of the plan chosen and the quality of healthcare services offered at a hospital. A multi-speciality advanced hospital treatment will be more expensive than treatment at a regular hospital.
- Location or pin code
The cost of a treatment may vary from place to place; medical expenses are especially high in metropolitan cities, such as Delhi or Mumbai. This automatically translates to higher premium rates for people living in such areas because they are most likely to avail treatment in their home city.
- Medical history and nature of disease
People who have a pre-existing disease fall in the category of high-risk individuals; that is, there is a high chance of them filing for a claim. Most health insurance companies ask individuals to share their medical history and/or go for basic full-body check-up before letting people purchase a policy.
In addition, if the nature of the disease is fatal or incurable, the medical insurance cost becomes high. Generally, treatment for such diseases is expensive due to the involved procedures, such as advanced tests, consultations, and rare drugs. Sometimes people who have diabetes, thyroid, or high blood pressure are denied a policy by insurance providers.
- Age
People often hear that it is better to buy health insurance in early age before any disease strikes; this is because insurance companies demand higher medical insurance premium rates for older people (they have high chances of falling ill and raising claim requests) in comparison with the youth.
- Policy term
Medical insurance rates for a long-term plan (for example 5-year insurance policy) will be higher in comparison with those for a short-term plan (for example 1-year insurance policy) as the chances of claim increase with time. Almost all insurance companies offer discounts on long-term policies.
- Lifestyle
People who indulge in regular drinking or smoking have a high chance of falling ill and requesting a claim in comparison with their counterparts—people who lead a healthy life. A person’s lifestyle is a significant factor determining a medical insurance rate, and sometimes, insurance companies can reject the applications of a high-risk individual.
You may wonder, how much does health insurance cost for smokers? The answer is up to 50% more compared with non-smokers.
- Number of people covered
Medical insurance rates are directly proportional to the number of people covered by a policy and the total assured sum. This is why individual insurance costs less than a family/floater plan.
- No-claim bonus
Health insurance companies benefit greatly from those policyholders who do not make any claims. Thus, most of them offer a discount on medical insurance premium rates—no-claim bonus. Depending on the number of claim-free years, a person can save up to 50% on a policy premium.
How can I lower medical insurance premium rates?
A health insurance price list available online gives a rough idea about premium costs, but these prices are not absolute figures; there are multiple ways to reduce medical insurance rates:
- Invest in a health insurance plan at a young age (if possible)
A person’s age significantly influences how much does health insurance cost per month. Young people get a policy at low premium rates.
- Choose less coverage for base policy
The lower the assured sum, the lower the policy premium. If needed, one can increase the amount later on.
- Opt for deductibles and/or co-payment clauses
Some insurance providers provide an option for policyholders by sharing the financial burden—deductibles and co-pay clauses.
- Add riders to the base plan
Choose plans with low medical insurance premium rates and add riders, as and when necessary, by anticipating treatment expenses for the future.
- Choose a health insurance plan according to the right pin code/city
Health insurance price lists are based on different locations; opt for a plan that covers cities in which one is most likely to avail healthcare treatment.
- Select long-term policies
Insurance companies offer lower premium rates (maybe discounts also) to people who opt for long-term plans than for those who choose short-term plans.
- Go for a family/floater plan
All things considered, family plans are more affordable than individual plans for all members and are ideal for people looking for coverage for their entire family.
- Purchase a plan only after comparing different options online
One may find plans offering inexpensive premiums with the same or similar benefits and ongoing discounts while researching online.
Importance of getting a health insurance plan
Whether you are an individual working in a different city from your parents or are responsible for your family’s well-being, unfortunate medical crisis can strike anyone. With the future being largely uncertain, medical insurance policies offer an efficient way of managing the finances during troublesome times.
With the help of medical insurance, one can:
- beat medical inflation by investing a fixed premium today and tomorrow
- safeguard family savings with coverage for medical treatments provided by insurance companies
- afford quality medical treatment without worrying about the funds
- fight long-term lifestyle diseases available with disease specific insurance plans and/or add-on riders
- avail tax benefits under the section 80D of the Income Tax Act on the policy premium paid while filing for their income tax return (ITR)
- enjoy cashless facility at network hospitals where they don’t have to pay the hospital for medical expense (provided by many insurance companies these days)
- ensure peace of mind by having a reliable plan to fall back on in case of a medical crisis
Final Note
As a general rule of thumb, it is recommended to select a plan that covers 50% of your annual income to answer one of the most fretted question—how much medical insurance is enough.
Although healthcare facilities have improved in the past few decades, medical inflation is on the rise. In such times, it is important to leverage financial tools like health insurance to safeguard savings and navigate medical crisis better.
