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What are Underwriting Levers in Health Insurance?

Roocha KanadeNov 13, 2025

When you go to buy a health insurance policy, your insurance provider doesn’t just randomly select your premium amount. There’s actually a detailed process behind deciding what you’ll pay, what’s covered, and what conditions might apply. This important process is called underwriting, and the main tools used to determine the premium amount are called underwriting levers.

These “levers” help insurers find a balance between risk and cost, which helps ensure that the premium you pay matches your health profile and the chances of needing future medical care. In this blog, we'll go through what underwriting levers are, why they matter, and how they influence your health insurance plan.

Contents

What Underwriting in Health Insurance Means
Key Underwriting Levers in Health Insurance
Why Do Underwriting Levers Matter to You?
Conclusion
Frequently Asked Questions

What Underwriting in Health Insurance Means

Underwriting is the risk assessment process insurance companies use before issuing a policy. It helps them determine the following.

Whether to offer coverage
What premium to charge
What terms, conditions, or exclusions to apply

Every insurer wants to protect itself from excessive claims while offering fair and competitive premiums to customers. Underwriting makes that possible by evaluating each applicant’s health, lifestyle, and background.

The term 'underwriting levers' simply refers to the factors or variables insurers can adjust to fine-tune risk. Think of them as knobs on a control panel - by turning one up or down, insurers can keep the balance between risk exposure and profitability.

Key Underwriting Levers in Health Insurance

Let’s look at the most common levers insurers use and how each one impacts your policy:

1. Age: Age is one of the most powerful underwriting levers. The older you are, the higher the possibility of needing medical care.

Impact: Premiums increase with age because health risks rise over time.

Example: A 25-year-old may pay ₹8,000 annually for a plan, while a 50-year-old might pay ₹18,000 for similar coverage.

2. Health Condition and Medical History: Your medical background says a lot about your future health risks.

Impact: Chronic conditions like diabetes, hypertension, or heart disease may lead to higher premiums or specific exclusions.

Example: Someone with diabetes might still get coverage, but with a waiting period before diabetes-related treatments are covered.

This lever helps insurers manage predictable medical costs linked to known illnesses.

3. Lifestyle Habits: Your everyday habits can directly affect your health and, by extension, your insurance risk profile.

Impact: Smoking, alcohol consumption, high-stress jobs, or sedentary lifestyles can raise premiums.

Example: Smokers often pay 20-30% more in premium than non-smokers of the same age group.

4. Occupation: There are certain jobs that come with a lot of risks, and these risks can heavily influence your premium amount.

Impact: People working in physically demanding or hazardous environments may be charged higher premiums.

Example: A construction site worker may have different risk terms than an office-based professional.

5. Geographical Location: Healthcare costs and disease patterns vary from one city or region to another.

Impact: Living in a metro area with higher treatment costs can result in higher premiums.
Example: Hospitalisation expenses in Mumbai or Delhi tend to be higher than in Tier-2 cities, influencing insurance pricing.

Insurers also consider regional disease prevalence, such as areas with high pollution or specific epidemics.

6. Sum Insured: The sum insured is the maximum amount your insurer will pay during the policy year.

Impact: The higher the sum insured, the greater the insurer’s potential payout, leading to higher premiums.

Example: A ₹10 lakh plan will cost more than a ₹5 lakh plan for the same applicant.

However, higher sums insured can be more cost-efficient in the long run, especially given rising medical inflation.

7. Add-on Covers and Policy Customisation: Optional add-ons like maternity cover, critical illness benefits, or hospital cash, also act as underwriting levers.

Impact: Adding benefits increases your coverage and, consequently, the premium.

Example: Going for a critical illness rider might increase your premium by 10-15%.

These choices allow customers to personalise coverage while insurers account for the added risk.

8. Family Composition: In family policies, it's the number and age of members that affect pricing.

Impact: Including older parents or multiple dependents can considerably raise the premium.

Example: A plan covering two adults and two young children will cost less than one covering parents aged 60+.

This helps keep the premium fair and in line with the overall health risk of everyone covered under the policy.

9. Claim History: If you’ve filed frequent or high-value claims in the past, it makes it look like a higher risk to the insurer.

Impact: Renewals might include adjusted premiums or loading (an extra charge).

Example: Someone with multiple hospitalisations in recent years might see an increase at renewal.

Responsible claim behavior can help maintain lower premiums over time.

Why Do Underwriting Levers Matter to You?

Understanding underwriting levers isn’t just for insurers, it helps you make smarter health insurance decisions.

Here’s how:

You can anticipate premium changes when renewing or modifying your policy.
You’ll understand why two people pay different premiums for similar coverage.
You can improve your insurability, for example, by adopting healthier habits or avoiding gaps in coverage.
You can compare insurers who use different underwriting models to find better value.

Essentially, being aware of these levers empowers you to take control of your coverage rather than being confused by pricing differences.

Conclusion

There is no insurance policy without underwriting levers. They are at the heart of how health insurance works. They’re not about discrimination, it's quite the opposite, they’re about risk fairness. Each lever allows insurers to tailor premiums and benefits according to real-world health and lifestyle factors.

For policyholders, understanding these levers means you’re no longer in the dark about why you’re paying what you pay. It helps you make informed choices and plan better financially, not just for you but your loved ones too.

Frequently Asked Questions

Below are some of the frequently asked questions on Underwriting Levers in Health Insurance?

Is the underwriting process and underwriting levers the same thing?

No, they’re not the same. The underwriting process is the overall evaluation insurers use to decide your policy terms, while underwriting levers are the specific factors like age, health, and lifestyle that influence those decisions.

Do all insurance companies have the same levers?

Not really. It depends from insurer to insurer.

Is there anything I can do to control the levers and in turn get a better premium?

Yes. Maintaining good health, avoiding smoking, going for regular medical check-ups, and declaring your details honestly can help you get better rates and smoother claim approvals.