Aarti Tibrewala Darooka
A chartered accountant and MBA, Aarti is an entrepreneur and financial literacy advocate. She has over 15 years of combined experience in the consulting, advisory and travel industries. A national ranker in CA, Aarti is a published author, who has written a plethora of books for children’s financial education and is currently helping build awareness for financial literacy for women through her platform, Sthreedhan.
Hetali is working with a publishing company and wants to plan for a baby. She earns a good salary as she has a lot of experience and has been trying to use the hike she got after the last appraisal to ensure that her own critical needs and those of her family are better taken care of. While consulting a few friends on how they are ensuring that the financial health of their families is in good shape, she learnt that while taking health insurance, many factors should be considered and carefully evaluated.
A friend who works with an insurance company explained to Hetali the critical factors that affect the cost of buying health insurance, which is also called the health insurance premium. These factors are primarily related to the health and habits of the person for whom the health insurance is being taken.
The first factor is age. Very simply put, the chances of falling ill increase as a person grows older. Therefore, the health insurance premium also increases with increasing age. It is especially higher for senior citizens as they tend to be more prone to falling ill or having a variety of age-related health problems. Irrespective of age though, it is important to take health insurance coverage for everyone as lifestyle-related diseases are on the rise even among youngsters.
The second important factor is gender. The health insurance premium tends to be higher for women as women tend to go through more ups and downs in their health than men, especially during their pregnancies.
The next factor is lifestyle. Lifestyle includes habits like smoking, drinking, eating habits and exercise. Smokers will always have a higher premium than non-smokers as they are more prone to lung-related diseases. Similarly, those who consume alcohol very frequently or are habitual drinkers will be prone to liver-related diseases. Someone who is not exercising or is on the higher side in their weight will have a higher insurance premium than someone who is fit and exercises regularly. All these habits will affect how you perform on the health assessment that is performed before providing health insurance coverage. For example, if you are someone who smokes a lot and does not exercise, it will reflect when you are asked to walk on a treadmill during the health examination.
Prior medical history also has a huge bearing on the person’s health insurance. If you have had some kind of major or recurring illness or have had some kind of accident that required hospitalisation, then chances are your health insurance premium will be adjusted to meet the extra requirement as per your history.
Further, someone who has made any health insurance claims in the past will have a higher premium as the insurance company will expect to have to pay you for any further claims you may make due to health reasons in the future.
External factors affecting health insurance premiums
While the above factors are based on a person’s personal medical history, there are some external factors that have an impact too. For example, the place you live in has a bearing on the cost of giving you medical insurance. If you live in a large metro city where medical facilities are expensive, you will have to pay a higher premium. If you live in a place that has limited access to medical facilities, where you are required to travel to another place for any kind of better care, then also you will have to pay more. The medical premium will always be commensurate to the cost of healthcare in your location.
Sometimes, if you have a family history of diseases such as diabetes, hypertension or any kind of diseases that are passed down genetically, your premium will be affected by the same. Your insurance company has to provide for the possibility of you contracting these illnesses more than someone who does not have such a family history.
The other factors that can affect your medical premium would include the kind of coverage you are looking for and what kind of deductions you want to allow from your insurance. If you want a policy that has a higher payout percentage, your premium may be a little higher. Also, sometimes cashless policies, i.e. policies in which you need not pay the hospital and then claim insurance (rather you submit the insurance documents to your hospital and they get paid directly by the insurance company), will command a higher insurance premium than regular policies.
Overall, what Hetali understood was that she would have to do adequate due diligence while taking her policy and since she was looking at starting a family, she would do well to opt for a policy that gave coverage for maternity costs as well!
After all, no one can predict the future but the least we can do is safeguard it!