Health Insurance Premium Calculator

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What is Health Insurance Premium?

Health insurance premium is the amount of money that you are required to pay at definite intervals, for keeping your health insurance plan running.

How Health Insurance Premium is Calculated?

Ever wondered how exactly do insurance companies finalize premiums for health insurance schemes? There is a broad range of factors that go into deciding the insurance premiums . However, each insurance company also does apply some company-specific guidelines too for finalizing the insurance premium for various health insurance policies. Here is a list of generic guidelines that are followed by most health insurance providers.

  • Marketing and administration expenditure:

    A lot of heads are covered under the marketing and administration expense. The expenditure incurred on these is also recovered from the premium paid by the policy holder. This expense includes cost incurred in designing a medical insurance policy, cost of marketing, commission to brokers, advertisements’ and brochure’s cost, and other general operational expenses.

  • Savings Part:

    This is that part of the regular premium which is put in various public investments. Investments in private sector are usually not done. These investments are made based on guidelines issued by the insurance regulatory body of the country. Health insurance premiums are calculated based on returns of these capitalizations.

  • Medical Underwriting:

    Insurance products are underwritten to strike a balance between individual and group policies. For this, risk is analyzed from various angles and a broad spectrum of factors in taken into account. The process of medical underwriting produces as a result, the corresponding eligibility and instances when medical coverage should be denied. This step is essential in preventing the insurance company from making losses.

  • Rate of mortality:

    This is the cost that a health insurance company suffers in case of any eventuality to an insured customer. The expense of mortality differs for various age groups and income groups and is generally high for older customers. For example:

    • Premiums become higher as one grows old
    • Premiums are higher for customers with lifestyle ailments like diabetes or blood pressure
    • Premiums are surely higher if sum assured is more
    Health Insurance Premium Calculator
  • Personal History:

    Insurance providers may or may not conduct a health checkup before an individual avails medical insurance policy. However, insurance companies do take into account customer’s health, his/her family’s medical history, personal habits like drinking and smoking and his/her age at the time of availing health insurance policy. All this information feeds into deciding the policy premium that an individual is required to pay. Generally, people with issues in medical history or those who smoke and drink regularly are charged a higher premium.

  • Modified Community Rating:

    The modified community rating takes into account a vast range of factors for calculating the policy premium for an insurance product. This mainly involves the geographical location, political stability of that region, industrial development, trade activities and lifestyle of a particular area.

  • Band Rating:

    Under this factor, the insurance provider underlines a base rate that can be charged for a particular set who possess similar characteristics like age, gender, geographical region, family size, and profession and so on. For example, a set that has working individuals in the age group of 25-35 years will always pay a lesser premium than a set with working individuals aged between 40-50 years.

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Medical Insurance Premium and Tax Benefits in India:

For every health insurance policy that you purchase, you get to enjoy medical benefits as well tax benefits under Section 80D of the Income tax Act. This tax benefit is dependent upon the manner of medical insurance premium payment and the person for whom it is paid.

Let us take a look at some of the conditions that determine when exactly a customer enjoys tax benefit on his/her health insurance scheme.

  • Tax benefit under section 80D is applicable if the premium contribution is made from an income that is chargeable under tax. For example, income from dividend is not taxable and hence premium paid using this money is not tax free
  • The mode of premium payment plays a major role in determining the tax benefit for a customer. In case medical insurance premium is made via cash then tax benefit under section 80D is denied. All other mediums of payment like cheque, demand draft, online banking are exempted
  • Premium made only towards health insurance policy of immediate family members is exempted from tax. This includes premiums paid for individual, spouse, parents and dependent children. Premium paid for anyone except these is not eligible for tax exemption
  • Specific premium amounts are eligible for tax exemption. This means that you cannot enjoy tax benefit after you have crossed a certain premium amount limit. For example, the amount of premium paid should be within Rs.15000 for self, spouse and dependent children.

Need of Medical Insurance Premium Calculator:

Calculation of health insurance premiums can be a required but cumbersome task. Most people generally go ahead with whatever amount their insurance providers suggest. However, with the expansion of online tools, the calculation of medical insurance premium has also become a quick and easy task. This also ensures that the policy buyer is aware in advance about the policy that he/she chooses to avail.

  • Planning your finances becomes much easier if you get to know your tentative medical insurance premium amount, beforehand. You then know the exact part of your monthly expense that you need to channel towards paying your premium.
  • You can know the most appropriate premium amount and the most suitable health insurance policy that you should go for. By adjusting various parameters in the health insurance premium calculator you can reach that optimum mix of sum assured and premium payment that suits your lifestyle perfectly.
  • Various health insurance policies are suggested by the online premium calculators. These policies can be compared to reach your most favored health insurance product. This will ensure that all your requirements are fulfilled apart from a comfortable insurance premium amount
  • Health insurance premium calculation is an extremely complex task considering the number of parameters that go into determining it. Hence, online medical insurance premium calculators are real helpful tools in making premium calculation a simple and quick task

Health Insurance Premium Calculator at BankBazaar:

Health insurance premium calculation is a piece of cake if you use the online premium calculator at Here are a few simple steps that you are required to perform before you reach a list of lucrative medical insurance schemes that suit your preferences the best.

Step 1: Go to the health insurance tab and click ‘search for insurance’

Step 2: Choose or feed in the city name that you reside in

Step 3: Input the number of adults and children that you wish to cover

Step 4: Input the age of the oldest member who you wish to insure

Step 5: Feed in your name, mobile number and email id and click ‘show me now’

Step 6: Based on your input, a host of health insurance schemes are populated from which you can choose the ones that you like the best.

GST rate of 18% applicable for all financial services effective July 1, 2017.

Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.

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