How is the Group Health Insurance Premium Calculated?
The premium for the master policy is calculated on the basis of the following parameters:
- Demographic: The details of the members of the group in terms of age, income, medical condition, size of the group, etc. are analyzed by the insurance company and a specific premium rate is assigned considering demographic factors.
- Coverage Benefits: As per the policy coverage benefits opted by the employer opting for the group health insurance policy, the premium amount will vary accordingly. Higher the benefits, higher will be the premium charged.
- Past Claim Experience: Past claim experience plays a vital role in premium determination. A favorable past claim history makes a low premium charge. On the other hand, adverse claim experience will attract an additional premium for the group health policy.
- Location: The location plays an important role in determining the premium. If the people covered under the policy reside in metro cities, then the premium will increase as the health care costs in metro cities are comparatively higher as compared to other locations.
- Riders: The additional benefits in the policy, attract higher premiums. Rider offers extra and enhanced coverage to the policyholders.