What is Premium Loading in Family Health Insurance, and How Can You Avoid Paying Extra?

Purchasing a family health insurance policy is important to secure your family’s financial health against medical emergencies. But often, people get confused with the concept of ‘loading’ on premiums while buying family floater plans.

Loading refers to an additional charge that is applied to the base premium amount at the time of underwriting a health insurance policy. It applies to individual policy buyers and families taking floater policies.

In this complete guide, we will understand what loading is in health insurance for family.

What is Loading in Health Insurance Premium Policy?

If you have pre-existing conditions or habits that could make you a higher risk, the insurer might add an extra fee just for you. It covers the added costs of insuring someone with health issues.

Loading allows insurance companies to price the risk of extending health coverage more accurately. The purpose of loading the premium is to adjust the standard premium and account for any additional risk the insurer may take for covering specific individuals.

Types of Loading

Different types of loading charges can be levied by the insurer while issuing medical insurance for parents. Let us understand the main categories:

1. Medical Loading

This is the most common type of loading applied to health premiums. Medical loading factors include the policyholder’s health status, medical history, pre-existing diseases, previous claims, etc. It aims to adjust the premium per the higher risk of medical conditions.

2. Age Loading

Advanced age is seen as a major risk factor by insurers. If the insured person is 60 or older, age-related loading may apply, accounting for age-related illnesses and healthcare costs.

How Does it Affect Your Premium?

  • The loading amount is calculated as a percentage of the base premium derived from your age, sum insured, policy features, etc.
  • Medical loading can range from 25% to 400% or even more based on the severity of your health condition. Other loadings are usually between 10% to 50%.
  • The loading percentage is applied to the standard premium; the resultant total is the final premium you pay annually.
  • A higher loading percentage leads to an increased overall premium. For instance, if the base premium is Rs. 15,000 and the loading levied is 35%, you pay Rs. 20,250.
  • All members in a family floater plan are assessed for loading individually based on their health profile. Cumulative loading is then charged on the total policy.
  • Pre-existing diseases, prior claims, occupations, age, habits, etc., are evaluated at every renewal, and loading is applied accordingly.

How Can You Avoid Paying Extra Loading Amounts?

While loading may be inevitable in many cases, here are some tips using which you can reduce or avoid premium loading to an extent when buying family floater health plans:

1. Opt for Higher Deductible

Choose a base policy with higher deductible amount (Rs. 25,000 – Rs. 50,000) instead of lower deductible like Rs. 5,000. Higher deductible attracts lower premiums, allowing you to reduce overall loading impact.

2. Increase Waiting Periods

You can opt for policies with longer waiting periods of 2-4 years for pre-existing illness coverage instead of a common 1-2 year period. The longer wait period will decrease the loading percentage significantly.

3. Evaluate Exclusions Carefully

Check the list of general and specific exclusions carefully before buying the policy. Opting for broader exclusions can lower your premiums and corresponding loading amount.

4. Enter Accurate Health Details

Complete the proposal form by providing correct information on your family’s medical history, conditions, etc. Hiding facts can lead to claim denial and higher loading later.

The Bottom Line

The key is to make smart choices while buying the policy and at renewals by comparing options thoroughly. Maintaining good health and transparent communication with insurers also go a long way in optimal premium loading.

While some loading may be inevitable based on your unique situation, following the above tips will significantly help you reduce the loading percentage and premium burden. Pay attention to this crucial aspect while purchasing family floater policies for maximum savings.