Methods to Calculate Group Health Insurance Premiums
In the realm of the insurance industry, both risk and premium are linked. The premium for insurance is precisely proportional to the risk covered. However, several other factors make an impact on the premium for a particular insurance policy. These criteria become different depending on the type of insurance, such as health, travel, or vehicle.
Here, we talk about the health insurance category, specifically group health insurance, which covers a group of people. It is necessary to know how group health insurance premiums are decided for a policy provided by an employer to cover their employees. So many insurance companies in UAE are offering group health insurance that can be purchased by companies for their employees.
How Are the Premiums for Group Health Insurance Calculated?
A list of elements that affect the premium calculation of a group insurance scheme is mentioned below. These criteria are considered during the underwriting process of the insurance companies in Dubai and the UAE, which finally determines the premium charged to the employer to insure their employees.
• Average age
The average age of the people being insured will be used to calculate the premium. This factor is related to finding the risk. In general, young people pose fewer health hazards than the older generation since they have better immunity and have not yet been diagnosed with chronic illnesses. So, the premium would be rather minimal.
Two software companies, for example, are trying to insure their employees. Employees in company A are on average 30 years old, while those in company B are on average 40 years old. If all other things exist consistently for both companies, the Group Mediclaim Policy premium for firm A will be cheaper than that of firm B due to the lower age.
• Type of job
Some vocations are risk-free, while others are quite threatening. Therefore, employment character is a crucial consideration in calculating the cost of insurance. The higher the risk linked to the employees' jobs, the higher the premium necessary to insure them.
For instance, the insurer gets applications for a group health insurance policy from two firms. One is an advertising agency, while the other is a manufacturing corporation planning to insure its factory workers. Because the danger in a desk job (advertising firm) is lower than the risk in a floor job (factory), the premium for the advertising company will be lower than the premium for the manufacturing company. This is the same case for all insurance companies in UAE and the entire world.
• Covered people
Group Health Insurance Plans' scope of coverage can be enhanced in terms of the people covered by the policy. There are policies that cover employees and their immediate family members, as well as ones that cover in-laws. For instance, coverage option 1 offers insurance for the employee, spouse, and parents. Option 2 offers insurance for the employee, spouse, parents, and parents-in-law. Because the breadth of coverage in option 1 is less than that of option 2, the premium for option 1 will be less than the premium for option 2.
• Sum insured
A policy's sum insured is the monetary maximum up to which the insurer reimburses the employee's health-related expenses. The sum covered by the policy can be talked about and selected by the employer and the insurance companies in Dubai and the UAE. This will be applied to all employees in the company.
The higher the premium, the greater the sum insured. For example, firm A selects to insure each of its employees for Rs. 4 lakhs. Firm B, on the other hand, selects a sum insured of Rs. 6 lakhs. In this case, firm B will pay a higher premium than firm A.
• Add-on covers
Employers are typically offered a standard group insurance policy. They can select good group health add-ons if they feel the need to enhance the policy coverage. The premium for the employer-provided health insurance policy rises as a result of these modifications. Popular add-on covers include consumables coverage, outpatient department (OPD) coverage, and so on.
For example, firm A is being provided with a standard coverage policy. The employer enhances coverage by adding OPD coverage in addition to the fundamental coverage. Therefore, the payable premium is more than it would have been if the employer had just chosen standard coverage. The insurance companies in UAE are capable of offering the best add-ons to their companies.
• Claim history
When renewing a policy with the same insurer, the claim history is used to compute the premium. If many claims are filed throughout the policy period, the insurer will reconsider the charging premium at the time of policy renewal.
During the insurance period, for example, company A filed fewer and less frequent claims than projected. During the coverage period, company B filed more frequently and nearly doubled the predicted claims. Therefore, the insurer will consider increasing the premium for company B based on its claim history.
There is no ignorance about the vitality of a comprehensive group health insurance plan for employees. A reasonable plan covers the employee and family members, offers a reasonable sum insured, and is reasonably priced for the firm. The best plan includes these aspects, hassle-free claims, and extra services and features.
Policyhouse.com is one of the best and most reliable insurance companies in UAE, with different types of health insurance plans and their add-ons. Our specialists in the industry offer free registration, top-notch service, dedicated customer support, instant claim processing, etc. Our pride is our years of experience and the confidence that has resulted from it. Choose the best and ensure the security of your business.
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