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  • Writer's pictureAhsan Malyk

Why does Health Insurance Premium Increase?

Have you noticed that the cost of your health insurance increases each time it is renewed? If so, why do you suppose this is the case? Continue reading to learn why health insurance rates rise each year, how to stop this rise, and what benefits you may get from Digit's health insurance for renewals.

Everything from your salary and rent to the cost of food and petrol. Your life's expenses, including the cost of your health insurance premium, are impacted by time and inflation.

And like other things in life, inflation is one of the main causes of this increase. The healthcare sector has much higher inflation than most other industries, which may surprise you (or not).

However, outside healthcare inflation, there are other factors like your age, your coverage features, claims you've made over the last year, and of course your general health and welfare that could cause your health insurance rate to go up at renewal.

Let's examine each of these factors in greater detail to see why your health insurance premium rises at renewal and what you can do to prevent it.

The causes of your health insurance premium's renewal hike

1. Cost-of-care inflation

The Economic Times reports that healthcare inflation is increasing at a pace of 12 to 18%! This covers general expenses including the price of prescription drugs, hospital admission fees, the price of different treatments, medical developments, and so forth.

Due to the increase in these costs, your insurer must also raise your sum insured, or coverage, each year in order to pay for these fees when you file a claim.

This is the main reason why, when you renew for a new policy year, your health insurance premium also goes up.

What can you do to combat it?

The bad news is that it isn't much you can do about this since it directly relates to medical bills and the required increase in your sum insured.

The good news is that some insurers do provide bonuses and renewal savings based on your claim history.

Therefore, find out if any of these benefits are included in your plan by contacting your insurer (or just checking your policy copy). You can find out if you have health insurance with Digit by looking at your policy summary.

However, for individuals who haven't filed any claims in the preceding year, yes, we do provide a cumulative bonus benefit. This means that we raise your insurance coverage amount without raising your health insurance premium!

Consider it a small reward for such excellent health care!

Additionally, we provide an add-on cover that allows you to alter your plan to automatically increase your sum insured by Rs 25,000 or Rs 50,000 each year in order to make it inflation-proof.

Whether or not you have made claims is irrelevant; the premium increase for this benefit will only be effective at renewal.

2. Your history of claims

Depending on how many and how many claims you've filed over the course of the year, some insurers will raise your health insurance rate. It's possible that not all health insurers operate in this manner.

Open your policy booklet and look at the claims section—or the section where your terms and conditions are listed—to see if your health insurance boosts your premium based on your claim history.

You won't need to worry if you have Digit health insurance coverage because your premium won't go up based on how many or how many claims you've filed.

What can you do to combat it?

It isn't much you can do with your current insurer because it is part of their terms and conditions if your insurer does increase your premium based on your claim history.

You might, however, think about switching to a different health insurer that does not have this restriction. Since porting is something you can only do at renewal, consider your other options and choose wisely.

3. Your age

You may already be aware of the fact that a number of factors, including your age, affect the cost of your health insurance.

Your health insurance renewal premium may in some situations also increase due to your age. This is particularly valid for people who reach 60 during or right before renewal.

What can you do to combat it?

You can't go back in time and get younger, but you can be careful about the amount of insurance you choose. You probably don't need a lot of coverage if you're still reasonably young, but your elderly parents might require more coverage if you have a plan for them.

Therefore, always adjust the sum insured for you and your family based on their age and medical requirements.

4. Change in benefits of coverage

Depending on the terms and conditions of your insurer, you may decide to adjust your coverage and benefits when your health insurance is renewed.

You might decide to do this if you decide you need greater coverage or if your personal circumstances change (maybe you plan to opt for a maternity add-on or have recently been diagnosed with a health condition that will need more coverage)

Therefore, your health insurance premium will also increase based on any changes you make, such as choosing an add-on or increasing your insured amount.

What can you do in this regard?

The best course of action in this situation is to thoroughly analyze your health insurance plan so that you may determine whether or not its features and coverage are appropriate for your evolving medical needs. With your current insurer, you can investigate and upgrade to other plan possibilities as well.

To determine whether there is another plan that is more suited for your current scenario, you might also compare various health insurance plans online.

5. Your physical and mental wellness

You already know that the most likely scenario is that the cost of your health insurance will at least slightly rise owing to inflation. However, the majority of health insurers also take into account your health over the past year and compensate you accordingly.

As an illustration, at Digit, if you haven't filed any claims throughout the year, we'll provide you a cumulative bonus benefit, increasing your coverage without raising your premiums at renewal time!

Similarly to this, if you just received a diagnosis of a condition that may demand more coverage, certain health insurers may raise your renewal premium.

What can you do in this regard?

You should make sure that you are taking good care of your health as the obvious solution to this. However, we are aware that life is unpredictable and that sometimes, despite our best efforts, accidents do happen.

One suggestion is to possibly refrain from filing minor claims during the year in order to take advantage of benefits like cumulative bonuses.

For instance, if you fractured your bone during the year, you could decide not to file a claim because the cost wouldn't be as great.

By doing this, you can benefit from an increase in your insured sum without experiencing any premium price increases and have a claim-free year.

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