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What are Health Insurance Premiums? How are they Calculated?

Learn about the definition of health insurance premiums and how they are calculated. To know more about health insurance policies in detail, Visit Now!

  • Jan 13, 2021

​Living in this fast-paced world has its repercussions on our health. As we get older, we realize the importance of maintaining a healthy lifestyle. Amidst a pandemic, all of us took extra care of ourselves. But, a life-threatening disease usually comes in when we are unprepared, and the rising healthcare costs can burn a hole in your savings. However, you can prevent this from happening by getting a health insurance policy that covers the majority of the health diseases that affect our population.

What is health insurance?

A health insurance policy is a contract between you and the insurance company, wherein the insurance company will provide you with financial coverage for any medical emergency in exchange for regular payments from your end.

In a health insurance policy, you will either get full reimbursement of your medical bills or you can get cashless treatment, wherein the insurer directly pays the hospital. When you decide on a health insurance policy, you will decide the coverage, inclusions and exclusions for your policy. After you provide all the essential information, the insurance company will determine the premium amount you will have to pay.

What is a health insurance premium?

In the health insurance contract, a premium is an amount that you pay periodically to the insurance company in exchange for insurance coverage they provide. Keeping up with the premium payments ensures that your policy is in force.

How are health insurance premiums calculated?

The premium amount for a health insurance policy is calculated based on several different factors. Although insurance companies have a guideline for calculating the premium, the listed below factors play an important role in deciding the amount:

1. Age: Age plays a pivotal role in deciding the premium amount. If you are young, the amount will be low as your health is intact and in good shape.

2. Medical history: Any serious ailments or critical illnesses in the past can result in a high premium amount.

3. Policy: The policy which you choose can also affect the amount of premium you will pay. If the policy includes a higher number of illnesses or the features offered are more, or if you have chosen more number of riders with the policy, the premium will be higher.

4. Lifestyle: Your lifestyle can also have a direct effect on the premium amount you pay. An unhealthy lifestyle may increase your premium amount. For instance, if you are a smoker or use tobacco products, you will have to pay a high premium.

5. No Claim Bonus: If you haven’t filed a claim during the tenure of the policy, you will be rewarded. The premium you pay will decrease by some percentage, and the coverage you get will stay the same.

Insurance Premium Calculator by Kotak Life

To make it easy for you to determine your premium outflow, Kotak Life has launched the insurance premium calculator. You have to fill a few basic information and coverage details, and you will be provided with insurance quotes that you are eligible to get. This helps you plan your insurance policy payment.

Additionally, Kotak Life has released the Kotak Health Shield Plan, which is a fixed benefit comprehensive health insurance plan that covers early or major stage diseases or conditions. This is for serious ailments like Liver, Neuro, Cancer or Cardiac. This plan will also provide you with coverage for accidents. Some of the key features of this plan are:

1. Provides coverage for 4 critical illnesses.

2. Ability to extend coverage to the spouse.

3. Provides tax benefits.

4. Allows you to enhance coverage.

Summing Up

A health insurance policy is one of the best ways you can protect yourself and your family from the rising costs of healthcare. This policy will provide you with insurance coverage in the event of a medical emergency. To keep the policy intact for its tenure, you will have to pay the premiums for it. Factors like age, health and lifestyle determine the premium amount you pay on the policy. You can use premium calculators to get a better idea of your policy payments.

Kotak e-Term

Download Brochure


  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

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