10 Factors Affecting the Premium of Critical Illness Insurance

The main factors affecting the premium of critical illness insurance are age, tobacco use, health condition, family medical history, occupation, lifestyle, gender, sum insured, policy term, and riders/add-ons.

Critical illness policy pays a fixed lump sum if you are diagnosed with one of the specified serious conditions, such as cancer, a heart attack, stroke, kidney failure or major organ transplant. Due to the high cost associated with these critical illnesses, insurance companies always evaluate the level of risk before determining the premiums.

What Factors Affect the Premium of Critical Illness Insurance?

The table below explains the main factors that affect the cost of critical illness insurance and why they make a huge difference.

How Does Age Affect the Premium of Critical Illness Insurance?

Age happens to be the greatest influence on a critical illness premium. The chances of suffering from conditions such as heart attacks, strokes, and cancer increase progressively as one ages. Therefore, the older one is when they acquire critical illness insurance, the more expensive the premiums become. 

Learn 7 Reasons why health insurance premiums change with age. 

Does Gender Affect the Premium of Critical Illness Insurance?

Yes, Gender can affect the premium because some critical illnesses are statistically more common in one gender than the other. For example, certain heart diseases and cancer are more frequent among men or women, and this affects the cost of insurance.

How Does the Sum Insured Affect Your Critical Illness Insurance Premium?

The premium rises as the sum insured rises, because the sum insured is the lump sum the insurer must pay on a valid claim. A larger payout is a larger liability, so a Rs 50 lakh cover costs more than a Rs 10 lakh cover for the same person. Thus, choosing an appropriate sum insured, taking into account your income, loans, and the cost of treatment, is an important decision.

Does Tobacco Use Increase the Premium of Critical Illness Insurance?

Tobacco usage leads to an increase in the premium due to the risk of developing various diseases, like cancer, heart attack, and stroke. It's important to be honest about your tobacco use when buying a health insurance policy. If you don't disclose it and the insurer later finds out, your claim could be rejected or the payout could be reduced for giving incorrect information.

How Do Your Medical History and Family History Affect the Critical Illness Insurance Premium?

Your medical history and your family's medical history will raise your premium if they indicate that there is a greater risk of making a claim in the future. These are two separate factors that are considered by insurers together.

Your medical history: If you already have conditions such as diabetes, high blood pressure, or high cholesterol, the insurer may charge a higher premium. In some cases, they may also add exclusions or ask you to undergo a medical check-up.

Your family medical history: If your parents or siblings have had conditions like heart disease, certain types of cancer, or diabetes, some insurers may treat this as a higher health risk and factor it into your premium.

When you buy a policy, you'll usually be asked to fill out a health declaration. For higher sums insured or older applicants, the insurer may also ask for a medical check-up. It's always best to answer these questions honestly so your policy remains valid and your future claims aren't affected.

Does Your Occupation and Lifestyle Affect Your Critical Illness Insurance Premium?

Yes. The kind of work you do and your everyday lifestyle can both affect how much you pay for critical illness insurance.

Your occupation: If you work in a high-risk job, such as mining, construction, or an industry that involves handling chemicals, you may have to pay a higher premium because these jobs carry a greater risk of illness or injury. People with office-based or other low-risk jobs usually pay less.

Your lifestyle: Habits such as smoking, heavy alcohol consumption, obesity, and a lack of physical activity increase the risk of serious illnesses like heart disease, stroke, and cancer. Because of this, people with healthier lifestyles generally pay lower premiums than those with higher health risks.

How Do Policy Term, Covered Illnesses, and Riders Affect Your Critical Illness Insurance Premium?

The choices you make while buying a critical illness policy can also affect your premium. The longer you want the cover, the more illnesses you want included, and the more extra benefits you add, the more you're likely to pay.

Policy term: When purchasing an insurance policy that provides coverage over a long period, you are most likely going to pay more premiums as compared to an insurance policy whose coverage period is limited to a few years.

Number of illnesses covered: A policy that covers more critical illnesses usually costs more than one that covers only a few, as the insurer is taking on a higher risk.

Riders and add-ons: Additional benefits offered by the policy, such as the waiver of premium, increase the premium because of the added benefits they offer.

Key Takeaways

• Age and tobacco use have the biggest impact on your premium. Buying a policy at a younger age and avoiding tobacco can help you get lower premiums.

• A higher sum insured usually means a higher premium. This is because the insurer has to pay a larger lump sum if you make a valid claim.

• Your health, family medical history, occupation, and lifestyle also matter. Existing medical conditions, a family history of serious illnesses, high-risk jobs, and unhealthy habits can increase your premium.

• The policy you choose affects the cost. A longer policy term, a wider list of covered illnesses, and additional riders generally increase the premium.

• Always disclose your details honestly. Hiding information about your health, tobacco use, or occupation can lead to your claim being reduced or even rejected.