Factors that Effect your Health Insurance Premiums! - Smartchoice.pk

Factors that Effect your Health Insurance Premiums!

In recent years in Pakistan, owing to the rising cost of medical treatment we have observed that people are getting aware and understanding the worth and importance of Health Insurance. Hence, there has been a significant increase in the number of people buying a health insurance policy. People are not only buying individual policies and but also actively pursuing health insurance policies for their family to make sure they have a financial cushion in case of an emergency or an incident. Health insurance not only covers a policyholder during their difficult times but also offers the insured tax benefits.

While registering your insurance application, the insurance providers generally conduct a comprehensive assessment of your health based profile. Based on their review and criteria, they fix the premium rates.
The imminent fear surrounding covid-19 and the constant rise in covid-19 cases have made people realize the importance of health and the associated benefit of health insurance cover. Insurance providers and online aggregators and other mediators have noticed a significant rise in demand for health insurance policies ever since the COVID-19 pandemic set in.

It is advised that if an individual is still uninsured and finally wants to take the nosedive, it is to be understood that health insurance premiums could fluctuate due to multiple factors such as age, your topographical location, pre-existing diseases, and the sum insured you opt for, among others. Also, each insurance provider could take into account different parameters while underwriting, which could also impact premiums.

Factors influencing health insurance premiums

Every insurance providers have specific guidelines based on which they decide the premium rates. Here is a list of multiple things that they consider while determining the medical insurance premium


This one of the perilous factors that has a major effect on the premium amount. Generally, insurance companies follow this rule of thumb. The higher the age, means higher the premium. Older people are at a greater higher risk of suffering from illness than young ones. So, if it is sensible to buy a health insurance premium when you are young; you will be to receive comprehensive coverage and better benefits for the policyholder at an affordable premium.
The older population is considered as high-risk customers by insurance companies. Health insurance premiums are mostly based on the probability of you falling sick. Most insurers have age-wise bands to decide premiums and others apply a small yearly increment.

Past Medical History of the Policyholder

When procuring a health insurance policy the past medical records are fundamental in deciding the premium. If you have a history of suffering from illnesses or have a pre-existing illness, then the premium will be higher for the policyholder. But if you have had no illness and have a relatively healthy life, then your premium will be lesser.


The nature of work and the extent of risk that you’re exposed to at work affects the premium charges. Suppose you work in a safe environment, your premium will be less, but if you work in an environment like a construction site or at an industrial unit where the risk of being injured is high, then the premium amount will be higher.

Policy Duration

The contract of your policy also plays an important role in your health insurance policy. If you choose a policy when it is on discount. It would be better if you buy/renew the policy before the policy tenure ends.

Body Mass Index (BMI)

Body mass index (BMI) and lifestyle may not be considered upfront for premium calculation but if you’re underweight or obese, it could push the insurer to reconsider your proposal for buying a health policy.
Premium amount is raised if you the individual procuring health insurance policy has a high BMI. People with high BMI are at risk of serious diseases including heart diseases, type 2 diabetes, breathing problems, high blood pressure and cancer. This is because people with high BMI are also at a high risk of suffering from various diseases like diabetes, and heart-related problems and therefore need regular medical care.
There’s an acceptable range in terms of BMI and if your BMI is very high, there are two possibilities. The insurer could either deny offering you a cover or come up with some amount of loading which will push up the policyholder premium amount.

Smoking Habits

According to a report published in Lancet, a medical journal. Smoking increases health risks, and the insurance companies see smokers as high-risk insurance holders and therefore charge a high premium amount. People who smoke pay high premiums as compared to non-smokers since they are more at health risk.

Geographical location

The location where you stay determines your policy premium cost. For certain geographic locations, the premium rates are high due to a lack of healthy food options, climate and health issues.

The Type of Plan You Choose

Premium payments vary depending on the type of health insurance cover you choose. A group health insurance policy has a lower premium as compared to an individual policy. Also, if you have purchased add-on covers like maternity or anything, your premium will increase. Individual or group insurance (which can also be categorized as “corporate health insurance”) has a low premium rate, while family floater has a high premium rate. Again, the policy terms differ from company to company.

Coinsurance Feature

While purchasing a health insurance policy, if you opt for coinsurance a feature that yet to is introduced fully in the Pakistani insurance market, your premium will be less. In coinsurance, you pay a specific portion of the claim for any claim, and the insurance company gives the rest. This step reduces the premium amount significantly.
After considering all these factors, the insurance company uses the health insurance calculator to decide the final amount of the premium. You can also use any online insurance premium calculator at Smartchoice to calculate your estimated premium.


Same as age plays a key role in determining your health insurance policy premium. The older you get, the higher premium you pay because your chances and probability of falling ill increases as you grow older.
A couple of insurance providers in some countries could also take gender into account while setting up the amount of the premium. In some cases, the premiums could be higher for men compared to women. Usually, the reason is since men are more likely to go out for work and, hence, more likely to meet with accidents or fall sick. Drug abuse and smoking are the other factors which could expose men to higher chances of heart ailments.”

Sum insured and add-on covers

The sum insured you opt for has a direct impact on the premiums. The add-on covers that you select for the health insurance policy is available for instance maternity plan (terms and conditions applied) also affect the overall premium but the rise depends on the type of add-on.
However, increasing the sum insured a couple of years after buying the policy does not mean that your premium will go up proportionately. “As your sum insured increases, the chances of you using up the complete amount aren’t very high. Therefore, the premium never increases proportionately. There would only be an incremental increase. The increment would also depend on the cover added for the said procured policy.
If the policy renewal is continuous and on time the insurance company could also negotiate with you by reducing the coverage where they’d exclude covering you for a few conditions while charging a regular premium.

Type of plan

The premium you pay could also depend on the type of plan you opt for. Typically, a family floater plan works out cheaper than an individual policy because the policy covers the entire family under the same sum insured.
For example, the premium you pay for buying two individual plans with a cover of ₹5 lakh each would be higher than what you pay for a floater plan with the same sum insured because the chances of both individuals falling sick is lower.

Note that the premium for a family floater plan is decided based on the age of the oldest member covered under the policy.

Family medical history

In some cases, individual or family medical history could also have a bearing on the premiums. Other than a mandatory waiting period for individuals with pre-existing conditions, the premium could be higher too because such individuals are more likely to get hospitalized and file a claim.
“A policy seeker with no ailments could end up paying less premium whereas a person with a medical history or any family medical history such as diabetes, cancer and blood pressure might have to pay comparatively higher premiums.

Types of health insurance plans

There are multiple health insurance plans available that have varying coverages and premiums. The premiums and coverage offered by the policyholder are directly proportional to each other. The plans are available for individual, family, parents, critical care, her care and many other plans. These plans vary in their premiums, types of coverage they offer and the number of people they provide coverage for in each plan. Some of the plans are specific to the needs that the plan is created for, for instance, the “Her care” plan specially caters to diseases that concern women like breast and ovarian cancer, etc.

The critical care plan offers lump sum coverage for critical diseases and ideally also has a very low premium amount as well. The family plan covers husband wife and three children up to the age of eighteen. The individual plan provides coverage for individual only and the parents care is an amazing plan providing coverage for the parents above the age of 45 years onwards, these plans upon regular renewal provide coverage for pre-existing conditions concerning the diseases that arise with age.

The plans categories are bronze, silver gold and in some cases platinum as well. These plans are based on the premium amount paid versus the coverage guaranteed or promised by the health insurance provider.

Unforeseen medical emergencies could create a huge dent in your finances, set you back by a few years, or completely disrupt your finances. “While we have access to the best healthcare facilities, it comes at a cost. And we wouldn’t want to compromise on medical care which could make us stretch ourselves and put our future in jeopardy. Having health insurance ensures you have enough financial support during a medical emergency,” said Shweta Jain, CEO and founder, Investography, a financial planning firm.

So buy a health insurance policy now if you don’t have it already.

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