How health insurance premiums are calculated

health insurance

The price which your insurance company charges you as a premium when you buy health insurance is dependent on the statistical data gained over time. This data is based on various factors that affect the human lifespan, such as age and health.

For example, the health insurance premiums of an 18-year-old will be much less than the premiums of a 50-year-old. This is because a younger person is less vulnerable to diseases than an older person, which also reduces the chances of filing frequent claims.

When you apply for health insurance policies, you have to go through an underwriting process which involves a thorough investigation of your present state of health, and involves investigating medical records to find the diseases that you are suffering from, or might suffer at a later date. 

Once the information is gathered, it is analyzed by the insurance company, which then predicts how much you should be paying for your health insurance. The rule of thumb is this: the younger and healthier you are, the cheaper are the premium costs.

The price of health insurance policies is also governed and regulated by the government, which keeps an eye on the policies to make sure that the needs and interests of the customers are well-met. Several insurance companies come with a free online calculator which can be used to come up with an estimate of the premiums that you have to pay for your health insurance. However, this rate is not precisely correct. They only give you a rough estimate. The price is only decided after a thorough verification of the details that you provide in your insurance application.

What else is taken into consideration?

When you buy health insurance, other factors also come into play to decide your insurance premiums. Insurance companies also look at mortality and sickness tables to predict the prospects of losses due to sickness and death. This table assigns a probability to age and gender and is also likely to be based on the geographical location of insurance applicants. 

Once this data is analyzed, insurance companies come up with a rate, which then happens to be the premium for your policy.

If an insurance company, on its part, fails to pay heed to the process of calculating premiums, then it may go through significant loss over time. Thus, they pay a lot of attention to this process. This is also one of the reasons why you should be wary of filling incorrect details in your insurance application. 

When the details you provide do not match your actual condition, then it is highly likely that your application might not be processed. That said, if you provide the company with misinformation at the time of policy renewal, then the claim that you make during your policy tenure might get rejected, leading to significant financial loss and leaving you in a vulnerable state against the numerous health risks in life. 


The process of buying health insurance should also revolve around conducting thorough research on what companies offer you the maximum benefits at reasonable premium rates. Bajaj Allianz health insurance, available on, Finserv MARKETS comes with nominal premiums and offers maximum coverage that lasts throughout your life. It also offers cashless hospitalization in more than 6,000 hospitals across India, which means that you do not have to travel from one city to another to seek treatment. It also has a high claim settlement rate, and the settlement process is free of intervention from any third party. With a health insurance policy, you can also avail of tax deduction under section 80d.

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