What Is Premium in Health Insurance?


May 07 2020


Health conditions are uncertain, and you never know when you will face medical emergencies. The cost of medical treatments is rising gradually. Here, to secure your financial base, health insurance policies provide you with a safety net during the period. But to avail of these services, you need to pay a certain amount of money every month to the insurer. This monthly fee that you pay to the insurer to be supplied with coverage when a medical need arises is the health insurance premium.

How are health insurance premiums set?

The health insurance premium differs from person to person. It is determined by analyzing various factors such as the type of policy, the sum insured, your age, gender, area of residence, etc. There are also a few other factors such as hospitalization costs, doctor visits, daycare treatment, maternity, ambulance services, pre and post-hospitalization, etc., based on which premium amount is determined.

In short, premiums are lower if you-

  • Are younger and healthier
  • Take less cover
  • Opt to be covered for fewer types of medical costs
  • Take fewer riders/add-on covers
  • Have a copay or a deductible amount


How are premiums important?

If you fail to pay the premium by the due date, and even during the grace period, you shall lose your health insurance coverage.

Premium is the mode of pre-purchasing your health coverage. If the premium payment term is three years and you fail to pay the 2nd-year premium, for any reason, you will not be able to avail of health coverage if you don’t pay it by the end of the grace period. In this case, the previous policy lapses, and you need to re-purchase a new policy again.

What are deductibles and copayment?

In addition to the premium, other additional costs involved in taking care of your health include deductibles and copayments.

Deductible: A deductible is an amount until which the medical expenses need to be borne from your pocket. If the costs exceed this lower limit, the policy becomes functional, and the hospitalization or other medical expenses will be taken care of by the insurer.

Copayment: A copayment is a fixed amount that you pay each time you get a particular healthcare service. The insurance company bears the rest of the cost of this service. More the co-payment amount, the insurance premiums become lesser and vice-a-versa. However, co-payment is not the only aspect that lessens the premiums.

What is Employee Health Insurance premium?

If your company offers health insurance, you will only have to pay a portion of the premium. The employer will pay a percentage of your premium as long as you continue to hold the job, which is known as employee health insurance premium.

Make sure that you choose your health coverage based on your family/own/life stage needs. Since corporate covers come in small amounts, your employee policy would not cover any major illness.

If you want to protect your entire family under your employee cover, you can ask your employer to top-up your policy accordingly. Once you switch your job or resign, the health insurance cover from the previous employer becomes invalid.

Are health insurance plans with low premiums good?

When choosing a health insurance policy, the common perception is that the cheapest premium will be the most cost-effective option. Actually, it’s a myth. Your choice of the plan should be based on not just how much premium you owe but whether you’re getting coverage worth your needs.

The low premium plans may not offer you all the benefits you need. In the end, you might end up paying more than you signed up for. A health insurance plan that provides extensive coverage, even if the premium is a little high, would be the best option for you in the long run. Consider your needs, family history, family requirements, susceptibility to illnesses, etc.


A monthly premium is a small price to pay for the benefits you will reap later on. So, don’t hesitate to take the first step towards a health insurance plan offering financial security when you most need it. It will help you focus on recovery rather than stressing about costs towards it.

ManipalCigna offers a host of benefits under its various health insurance plans offered at low premiums. Check out ManipalCigna ProHealth Insurance plans to get a comprehensive hospitalization cover for yourself and your family.