What is Health Insurance Premium and How is it Determined?

What is Health Insurance Premium and How is it Determined?

Bajaj Finserv Health
January 17, 20225 mins read

Key Takeaways

  • Health insurance premium is what you pay to enjoy the benefits of a policy
  • Your premium is affected by many factors like age, medical history, lifestyle
  • Online premium calculators can help you estimate the sum for policies

Having a health insurance policy is a necessity in today’s world. But you may not have a good understanding of certain aspects of a policy. The terms of policy, the cover offered, and health insurance premium is some aspects that you may take your insurance provider’s word for. While that is not a bad thing, you should always know what you are paying for. 

You can get to know the terms and cover offered by reading the policy document. When it comes to the premium, you may not find much information in your policy. Understanding your premium is important as it helps you plan your finances and make an informed decision. It also reduces your risk of defaulting on payment of the premium. Read on to know more about what health insurance premium is and how it is determined.

What is a health insurance premium?

The principle of a health insurance policy is that the risk during a medical emergency is transferred to the insurer. The health insurance premium is the amount that you have to pay to the company for this transfer to be feasible. Your premium amount is dependent on a lot of factors. Your insurer will take these factors and your policy type into consideration. This will help determine how much premium you will be paying.

Additional Read: Health Insurance Myths and Facts

What factors determine the health insurance premium amount?

Age and gender

Age is important while calculating the premium because the older you get, the higher the amount due to increased health risks. The premium in your 20’s will be significantly lower when compared to your 40’s. Gender comes into play too as women usually live longer than men. Men are also more prone to chronic heart conditions [1]. This often results in women paying lower premiums than men.

Reduce Your Health Insurance Premium

Medical history

Your family history and past medical reports play an important role in determining your premium. There may be a screening test too. The premium is usually on the higher side if you have a history of or existing health conditions.


Your lifestyle affects your health, which is why it also affects your premium. This is also the case in family floater plans. If any member under your policy including yourself drinks or smokes regularly, your premium may be on the higher side. This is because smoking and alcohol habits are likely to cause adverse heart conditions [2]. 

Area of residence

Where you stay also affects your premium. This is because some areas have better sanitation, hygiene practices, and air quality. Insurance companies link the lack of these to higher risk of a health condition. If your area of residence is more prone to natural calamities, you may pay a higher premium as well.


Some professions have more occupational hazards than others. Here are a few common ones.

  • Armed guards
  • Coal miners
  • Electrical workers
  • Firefighters
  • Construction laborers

If your profession belongs in this category, it may increase your risk of developing health conditions. This results in a spike in your premium. 

Pre-existing diseases, if any

If you have any pre-existing conditions, you may have to pay a higher premium. This is because you need a higher coverage when compared to others. You may have to undergo certain tests to determine whether or not you have any additional health conditions. 

Body Mass Index (BMI)

People have a high BMI when they cross their ideal weight. A high BMI results in a sharp rise in your premium. This is because those with a high BMI are more prone to heart ailments, diabetes, or joint issues.

Policy chosen

The type of policy you select directly affects your premium. It will be lower if your plan has low risk and vice-versa. Your coverage and the number of people under the policy also affect your premium. It may also be affected by the types and number of add-ons you have. 

What is Health Insurance Premium-36

Policy tenure

The premium of a two-year policy will be higher than a one-year policy. However, some companies offer additional benefits when you opt for a long-term policy. So, talk to your insurance provider before your set the tenure of your policy.

No-claim bonus (NCB)

You receive an NCB when you do not file a claim for a year. Usually, it is used to increase your insured amount without affecting your premium. It can also be used in the form of discounts on your premium. 

Additional Read: How to Choose the Perfect Medical Coverage

Apart from this, your premium may also be affected by the following factors

  • Mortality rate
  • Policy underwriting
  • Investment and savings
  • Other marketing expenses

To make planning easier, you can use an online calculator for computing health insurance premiums. With it, you can calculate your estimated premium after adding in the required details. An online Health Insurance premium calculator may ask for the following information.

  • Your name
  • Your age
  • Number of people to be insured
  • Name of policy you are looking for
  • Your medical history
  • Insurance cover amount
  • City of residence

Now that you know the factors that affect your premium, you can choose the right amount along with a good policy. For affordable premiums and high coverage, check out the Aarogya care Complete Health Solution plans on Bajaj Finserv Health. Choose between any of the four variants based on the coverage you want. You may also reduce your premium amount by opting for the Silver or Platinum copay plans. This way, you can safeguard your health without added financial worry.

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  1. https://pubmed.ncbi.nlm.nih.gov/23331196/
  2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6527044/

Please note that this article is solely meant for informational purposes and Bajaj Finserv Health Limited (“BFHL”) does not shoulder any responsibility of the views/advice/information expressed/given by the writer/reviewer/originator. This article should not be considered as a substitute for any medical advice, diagnosis or treatment. Always consult with your trusted physician/qualified healthcare professional to evaluate your medical condition. The above article has been reviewed by a qualified doctor and BFHL is not responsible for any damages for any information or services provided by any third party.

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