Does Health Insurance Premium Increase Every Year?

Yes, your premiums can increase over time, but it is not guaranteed every year. Some common reasons for premium increases include age-band changes, rising medical inflation, changes in coverage, or insurer-wide claim trends. 

This blog helps you understand why health insurance premiums increase, how to plan long-term healthcare expenses more effectively, and how to avoid sudden premium hikes at renewal.

Contents

• Why Do Health Insurance Premiums Increase?
  • Impact of Age and Risk: 
  • Medical Inflation: 
  • Changes in Coverage: 
• How is Health Insurance Premium Calculated? 
• Tips to Manage Rising Health Insurance Costs
• Conclusion
• FAQs

Why Do Health Insurance Premiums Increase?

Health insurance companies base their premiums on risks, healthcare costs, and benefits of coverage. Here are the key factors that can influence premium changes during renewal.

Impact of Age and Risk: 

Age plays a major role in determining health insurance premiums. As you grow older, the likelihood of needing medical treatment and being hospitalised increases. Thus, insurance companies categorise their policyholders into age brackets.

To illustrate this, let's take an example. A health insurance plan worth Rs. 5 lakhs for a 28-year-old may cost ₹7,000 per year, whereas the same plan for a 40-year-old may cost ₹ 15,000 or more. 

Therefore, buying health insurance at a younger age can help secure lower premiums for the long term.

Medical Inflation: 

The cost of healthcare services in India is growing consistently. Hospitalisation charges, surgical procedures, drug prescriptions, and diagnostic tests have gone up steadily during recent years.

According to industry estimates, medical inflation in India is around 12–14% per year, which is higher than the general inflation rate of 3–4%. This means healthcare costs are rising faster than overall prices in the economy. Due to increasing treatment and claims costs, insurers may revise premiums over time to manage rising healthcare expenses.

Changes in Coverage: 

Your premiums could also go up if:

• You increase your sum assured

• You add riders or extra insurance policies

• You upgrade to a comprehensive policy

• You include more family members in your policy

While low-premium health insurance policies seem affordable, the wise thing to do is to compare the coverage benefits offered rather than just the price.

How is Health Insurance Premium Calculated? 

While calculating insurance premiums, insurers take into account various aspects such as:

• Age

• Medical history

• Amount of insurance coverage

• Lifestyle habits

• Geographical location

The number of individuals covered by the policy also determines the premium amount. For example, a comprehensive family floater health insurance plan with a monthly premium could be more expensive than a basic individual plan, since it covers more people.

A health insurance premium calculator can help estimate insurance premiums for better budget planning.

Tips to Manage Rising Health Insurance Costs

The long-term effect of the rising premiums could be minimised by implementing the following recommendations:

• Purchase health insurance while still young

• Keep your No Claim Bonus (NCB) intact

• Utilise the benefits provided by preventive care services

• Check out other options before renewing

Conclusion

Health insurance premiums tend to rise with age, inflation in healthcare services, and modifications in coverage plans. Nevertheless, premium hikes may not necessarily occur annually, nor will individual claims result in premium increases.

Are you looking for health insurance that offers comprehensive coverage, cashless hospitalisation, and hassle-free claims support? Explore ACKO Health Insurance plans designed to help you manage rising healthcare costs with greater peace of mind.

FAQs

Below are some of the most commonly asked questions about Does Health Insurance Premium Increase Every Year in India.

Do health insurance premiums increase every year?

Yes, premiums can increase due to age, rising healthcare costs, changes in coverage, and insurer-wide claim trends

How is the health insurance premium calculated?

Insurers calculate premiums based on age, medical history, sum insured, lifestyle, and policy type.

Can I claim tax benefits on health insurance premiums?

Yes, eligible policyholders can claim a deduction for health insurance premiums under Section 80D of the Income Tax Act.

Are low premium health insurance plans enough?

It depends on your healthcare needs. Lower-premium plans may offer limited coverage compared to comprehensive policies.

Can health insurance premiums increase after making a claim?

Insurers generally do not increase premiums for an individual policyholder solely because a claim was made. However, premiums may increase at a broader policy or age-group level due to rising healthcare and claims costs.

What is the GST rate on health insurance premiums? 

As of September 22, 2025, individual health insurance policies, including family floater and senior citizen plans, are now 0% GST in India. However, group health insurance policies, such as employer-sponsored or corporate health plans, still include 18% GST.

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