It is important to understand the key concept of Health Insurance before trying to understand why exactly the Premium rises with age.
What is health insurance?
A health insurance policy
provides a protection to you and your family in case of sudden medical emergency or bodily wounds. Mediclaim
is same as a health insurance, the terms are often used interchangeably; it is a Hospitalization Coverage Policy
available in public and private sector general insurance companies. The policy generally affords hospitalization and treatment expenses for illness suffered or accidental injury sustained during the policy period.
Why health insurance?
Every individual is exposed to various health hazards and medical emergency can fall upon anyone without any prior warning or time for preparation. A health policy provides you with a financial cushion of comfort during the period of crisis.
Why does health insurance premium rise with age?
There is a tendency for health insurance premiums to increase with age i.e. to say the older you are higher the premium you have to pay. Not only that after a certain age it becomes difficult to get a health insurance even if you are willing to pay higher premiums. You can get coverage for medical conditions that may be detected over the years provided that you were Insured earlier and there was continuous renewal without any break in the policy. Moreover if you are insured at younger age each 'no claim' year would fetch you a concession on your premium or a Bonus in your sum insured amount at no extra cost even though the management of 'no-claim' bonus varies from company to company. That’s because the company get the benefits if you do not file any claims as they do not have to pay anything, this benefit is passed on to you as a bonus. To understand why actually healthcare premiums increase with age it is required to understand how exactly the premium is determined.
How is premium of mediclaim or health insurance determined?
Insurance premium depends on several factors, most important are the ones given below:
a.Age of the insured
b.Sum of coverage required
c.Number of family members to be covered within the policy
d.Your health condition
e.Your income earning
The rise in premium of health policy is caused by combination of all the above points which is directly proportional to age. One of the key factors that determine the cost of the health insurance premium is the quality of health which generally goes down with age. Health of an individual goes down with age because as an individual gets older he becomes more vulnerable to diseases and old age related problems. Not only that, as a person ages his reflexes and constitution weakens resulting into higher susceptibility to accidents. That’s the same reason why driving licenses are not renewed after a certain age. An aged individual might take all the precautions like not driving, not exposing himself to any hazardous conditions, but the bitter truth is that with passing age even the day to day activities like cooking, shopping, crossing the road, washing clothes etc start becoming a risky venture. It’s all because as a person grows older he gradually loses control over his nerves, muscles, emotions, logic, decision making skills, and reflex actions.
Also, as time goes on an individual’s responsibilities increase, the number of Dependants
to be covered increases, sum of coverage increases, the source of income decreases, all these factors combined effect the interest of healthcare providing company resulting into rise in premium of health insurance