Every application for a health insurance policy has to undergo the underwriting process, whereby the health condition of the applicant is evaluated by the underwriters. Your past and present health condition reflect the state of your health for the future. The rate for your insurance policy is also set accordingly. Read along to know which factors are considered by the insurers when they determine your coverage and rates for insurance protection.
Factors affecting health insurance rates
Insurance coverage is denied if the applicant appears to have too many health risks. The lesser risks you have, the easier it will be for you to buy health insurance coverage. The following factors will determine how much you are going to pay for your policy:
- Age of the person – Your health insurance policy will be much cheaper if you buy it when you’re young. Young persons are usually considered healthier than elderly individuals. Old persons are more likely to develop health problems than young people, and the health care costs for them are also going to be more. For this reason, individuals have to pay more for health insurance coverage as they age.
- Gender of the person – Women have to pay more for their insurance than men. Supposedly, women are more likely to visit doctors and thereby incur more insurance costs. Besides, the insurers also charge more since they have to bear the costs for maternity care for the women as well, along with the regular costs of healthcare.
- Pre-existing conditions – A thorough health check-up is done to check how healthy an insurance applicant is. Blood pressure, blood sugar, weight, BMI, etc are thoroughly evaluated to ensure that the person is not concealing any existing medical condition. Individuals having pre-existing medical conditions need increased insurance protection. They are marked as ‘high-risk’ individuals. The insurers recognize that they’ll have to bear more expenses for medical issues related to the pre-existing condition of the insured. Thus, either coverage is denied for them or they have to pay more for health insurance protection.
- Family medical history – The family histories of individuals can also affect their health insurance rates. Persons with a family history of cancer or with heart diseases running in the family, have to buy additional insurance protection. Thereby, their costs for health insurance also increase.
- Smoking habit – Smokers have to pay more for their insurance protection. It is because individuals who smoke usually have increased chances of being diagnosed with cancer and other ailments. Usage of smoking – cessation products like nicotine gums, etc. may also affect the policy rates. Even after you quit smoking, you may have to wait for 2 to 5 years or more, before you’re allowed the non-smokers’ rate for health insurance coverage.
- The previous record of mental health – The insurers also check whether the person had undergone counseling or used anti-depressants, before granting him/her health insurance coverage. Often, individuals have to pay more if they had been diagnosed with or cured of any major mental illness.
- Occupation – Individuals who are exposed to unsafe chemicals or radiation as a part of their job are more prone to suffer from illness. As a result, they have to pay more for their insurance protection. Again, individuals with sedentary jobs have increased chances of suffering from cardiovascular ailments. In this way, your profession also influences your health. Consequently, it is also taken into consideration by your insurer, when they determine how much your health insurance premiums are going to be.
- Choice of deductible and coverage – It is apparent that the quality and extent of your insurance coverage will affect your rates. You’ll have to pay more for comprehensive coverage. However, it’s advisable to check your insurance needs first, so that you don’t end up paying for unnecessary coverage. Again, a lower deductible will increase your health insurance rate. You can enjoy lower premiums if you raise your deductible for the policy.
- Previous insurance applications – Your health insurers check whether you had any previous health insurance coverage and if you had made any claim against the policy or not. They also try to find out the reason why you want to change insurance companies. The claims history etc. also affects your health insurance policy. Your rates may increase if you had gaps in insurance coverage.
- Credit score – The insurers also check credit scores to assess your financial health. Lots of missed payments and a poor credit score might result in an increased premium rate for you. The insurers will charge you high since they’ll assume that you may miss your insurance premiums as well.
Apart from the above, every insurer might have its own set of guidelines by which they assess the risk associated with an insurance applicant. While some insurers offer lower rates for married couples, others may offer discounts to loyal customers or to those who have bought multiple policies from the same insurer. The key point that drives the insurance industry is the ‘risk-factor associated with individuals. The higher your health risk is, the more will be your insurance premiums.