If you are in the market to purchase a health insurance policy, you may be baffled at the array of prices of similar policies. There are a number of factors that determine the premiums on your health insurance policy. Each health insurance company will have their own actuarial team that determines the prices and classes of risks for each applicant. The applicants risk is a large part in what determines their risk class, but there are other aspects which causes fluctuation in premium prices.
One of the major factors that can raise health insurance premiums is the use of tobacco. Tobacco has been known to cause a number of health ailments that includes cancer. This factor can significantly increase the cost of health insurance. Knowing that cancer and smoking will decrease the average lifespan of a person, insurance premiums will rise. In some cases, health insurers will provide an incentive to help the insured quit smoking and cover smoking cessation products including nicotine gum, the patch, etc.
To qualify for health insurance, the applicant must be in reasonable health as well. This includes a proper height, weight and body mass index. People seeking coverage with a high body mass index, will have elevated premiums compared to those with an average BMI. Some insurance companies will not insure an obese person as it is not considered an insurable risk. Applicants looking to have the lower end of the premiums should be in the best health possible prior to applying for coverage.
An applicants age can have an ample impact on the price of coverage. The majority of younger people have minor issues with health issues. These may include common colds, a flu, ear infections, small accidents, etc. As a person ages, the likelihood of that person going to the doctor, needing critical care or becoming diagnosed with a chronic disease increases. The cost of major health issues becomes riskier for the company to insure. This is a direct result of increasing premiums as the person ages.
Pre-existing conditions for applicants will also raise the premiums on health insurance costs. Pre-existing conditions require more visits to a practitioner and greater risks for the insurance company to cover related claims to the pre-existing condition. Some insurance companies will only cover certain aspects of the pre-existing condition or won't cover anything at all.
Another factor that may increase an applicant for health insurance premiums would be their gender. Unlike life insurance, women usually pay higher premiums than men for coverage. The reasoning behind this is due to the fact that women go to the doctor more often, need an OB/GYN specialist, take more prescription drugs, have maternity costs and are subjected to certain chronic diseases. The average cost to deliver a baby range anywhere between $10k-$15K of which doesn't include the prenatal and postnatal medical care.
Other risks that the insurance companies factor in when determining premiums for the applicant are their lifestyle choices. These can range from a number of different topics including their profession, marital status, where they live and more. Insurance companies will take in all factors when determining a reasonable cost for insurance. For obvious reasons, a race car driver will be a much higher risk than an accountant. Insurance companies also are aware that married couples will live longer than single people. Other factors including the area code in which the applicant lives will be represented in the premiums. People that live in the same areas, tend to have similar eating, exercise and living habits.
Insurance premiums can be expensive, but insurance companies must manage risk properly and set a proper premium on applicants. Higher risk applicants will have higher premiums. Some variable that an applicant can control is eliminate tobacco use, exercise regularly and eat right for a healthy body mass index and have a safe occupation. Other factors including pre-existing conditions, family health history, gender, etc. the proposed insured won't have control over. If an applicant was to choose higher deductibles, then the premiums would decline. However health insurance can be costly, but if the right coverage isn't in place, a person could be exposed to a substantial risk.
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