Increasing costs of medical aid, the shortage of doctors, and the hurtful Obamacare reforms that have expanded the ambit and cost of healthcare are two reasons that have, in recent times, spurred an interest in buying health insurance policies. Many people choose to scour the Internet in search of quotes for these policies and only end up being thoroughly confused-different insurance companies tend to have different rates for like policies. You probably have felt the same exasperation yourself. So, here’s a discussion on how insurance companies actually calculate your health insurance premiums.

Your Risk Profile

Your health insurance premium costs depend on a host of factors that go on to make up your risk profile. This risk profile determines whether a particular company will insure you or not and if they do, what would they quote. Thankfully, many of these risk factors are firmly under your control and knowing how these influence your health insurance quotes will only help you bag or gain the most lucrative premium prices.

Common Factors

The following are some physical and medical risk factors that insurance companies take into consideration when they calculate your health insurance:

  • Age: Younger individuals usually draw lower premium prices. This is because they tend to be healthier and are supposed to remain healthy for a longer period of time than the aged population. Young people also tend to visit the doctor less frequently, preferring instead to pop in an over-the-counter pill. Younger people generally have stronger health than their elderly counterparts. Most people in their 20s and 30s and even their 40s rarely even see a doctor, certainly males in these ages.
  • Gender: Some health insurance companies charge higher prices for women than men. It is believed that women, on an average, have reasons to visit the doctor and take prescription medicine more often than men. For instance, health insurance companies that provide maternity coverage charge high premiums simply because pre- and post-natal medical care and costs of delivery tend to be substantial. This is just the nature of the field; men and woman are not the same and the number of health care visits is just an indicator of this. The military knows all about this. The U.S. navy in fact knows that woman visit medical more often than men on naval ships and that special rules have to be written and kept in order to accommodate pregnant female sailors.
  • Family Medical History: This is one of the most critical determinants of health insurance premiums for individuals. Individuals with family histories of certain types of diseases, like cancer and cardiac ailments, have to pay higher premium amounts than someone who does not have immediate family members who have been afflicted with these diseases. This should not come as a surprise though to you.
  • Body Mass Index: The above three are factors are beyond your control. But, you can keep your body mass index (BMI) in check to ensure lucrative premium prices. All other factors remaining constant, people with high BMIs are at considerably higher risk of developing medical conditions like diabetes, hypertension, and cardiac diseases. Thus health insurance companies usually quote high prices for these people. And kudos to them too, because the lure of attractive premium prices is usually a powerful incentive for people to shed some unhealthy pounds! Rather than have some cake for dessert, why not some cantaloupe?
  • Smoking: Most health insurance companies are actually known to penalize insurance seekers who are habitual smokers. Insurance companies charge high premium rates to this group of individuals and also from those who have quit using tobacco in the recent past because there is a belief that the latter has a greater risk of acquiring ailments like cancer than a person who has never smoked. In fact, some insurance companies may even decline to provide coverage to people who smoke. On the other hand, it is worth noting that there are many insurance companies that provide coverage for aids that help quit smoking, like nicotine gum and nicotine patches, but only if these have been prescribed by a doctor.

A Healthy Lifestyle

A review of the above-mentioned factors that affect health insurance premiums make clear that you actually stand to gain a lot more than just reduced premium prices if you can modify your lifestyle and discard some unhealthy habits. You will certainly save money in terms of food costs.

Occupation & Culture

Apart from afore-mentioned physical and medical factors that govern health insurance premium prices, insurers also consider the profession of the applicant and the socio-cultural environment he resides in before quoting premium prices.

People who work in high-risk jobs that is, professions where he may be exposed to dangerous levels of radiation or chemicals or one where there are higher recorded instances of workplace injuries, are charged higher prices on their insurance coverage than someone who is in a job that is perceived to be less risky. Individuals whose jobs entail frequent air travel are also usually charged higher prices on their health insurance policies.

It may not be known to many but insurance companies tend to fix premium prices depending on where you live. This is because insurers typically have generalized risk profiles for people living in the same neighborhood and classify you as someone possessing a similar profile. For instance, people living within close proximity to one another tend to share the same environment (polluted or clean that may increase or decrease their chances of developing respiratory tract ailments), have access to healthy eating out options (or not), and have a cultural affinity (or aversion) to exercising. Some insurance companies tend to fix premium rates for neighborhoods as a whole based on these generalized risk profiles and so you might just be lucky (or unlucky) to acquire some price quotes if you live in a certain area.

A Correlation

Insurance companies also tend to plug in the costs they incur for operating in a specific area into your premium price. So, if the cost of operating his business in your area of residence is less for your insurance provider, then expect less premium prices to pay out for your health insurance policy.

Knowledge is Power

As you may have realized that some of the above-mentioned physical, medical, and other sundry factors that determine your health insurance premium costs are quite dynamic and beyond your control. Some others are not. But a thorough understanding of what motivates an insurer when determining your health insurance premium price will help you judge the merits of various policies offered by different companies. This knowledge will not only help you when you shop for polices but also ensure that you shop smart and do not get cheated.


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