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Health Insurance PremiumsWhen it comes to health insurance, most of us get daunted by the various terms and conditions associated with it. It is natural for us to get confused trying to understand the complicated process. Hence we don’t try too hard to fathom the methods and factors involved in the health insurance policy making in its entirety. However if you understand the process of determining the rates and benefits of a policy, you may be able to choose your policy more wisely. Factors which Determine The Pricing of A Health Insurance PolicyThe insurance companies base the pricing of their policies on some factors which can be broadly divided into two categories. They are –
Those factors that are directly related to the particular type of policy and the kind of coverage it provides. The insurance company offers many types of medical policies. It keeps an account of the payments made out to policyholders against every kind of policy that it offers, over a certain period of time. Thus it can find out which types of policies are more profitable and also which ones are more popular with the customers. This information dictates the company’s pricing formula for different healthcare insurance policies. These are the factors that are related to the customers, individual or group of individuals. During the process of approval of a policy, the prospective customer is asked for a lot of personal information, like – After going through these factors the insurance companies determine the insurability of your case. This is done on the basis of points for every factor of the individual’s information. This is used to find out the ‘secondary rating factor’. Determination of The Final PremiumAfter considering the entire primary and the secondary factors and some other expenses, the company arrives at a figure which is your monthly premium that they will offer the policy for.
- are considered and added to the basic premium to find out the final monthly payment you or your employer needs to make to the insurance company for the particular policy. When you know the factors which the insurance uses to arrive at the figure which is to be your premium, you can negotiate a better deal with the insurance company. |
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