Why healthy oldies have no discounted premiums over insurance policy?
By Deepak Yohannan
Mark Twain once wrote, ‘Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.’ Easier said than done, says Mr. Kumar. At 50 years of age, Mr. Kumar finds it difficult not to mind when the health insurance premium falls due. As he draws out the umpteenth cheque, he cannot help comparing his current premium amount with the rates he used to pay as a heavy-drinking, chain-smoking youth of 26.
Mr. Kumar gave up drinking and smoking years ago. He jogs every morning, eats healthy and is fitter and healthier than most of his peers. He believes that he deserves a discount merely for being this healthy at his age: ‘I visit doctors rarely. I have no cholesterol, no heart disease, no diabetes, no BP problems—nothing. Yet, my health insurance premium is so high. Why?’
Health insurers are discriminatory beings. They prize youth and reward young people with low premiums, while older folk have to bear high costs that increase with age. Statistics (and general experience) tell us that the older you get, the more frequently you fall sick, visit doctors, require hospitalisation and take expensive prescription drugs.
If you are particularly healthy at your age—like Mr. Kumar is—you are probably an exception, and insurance companies do not necessarily cater to exceptions. The insurer will reward Mr. Kumar for his good medical records as well as for being a teetotaller and a non-smoker, but his annual premium will be determined by his age group.
It works like this:
Each year, the insurance company evaluates claim statistics. They will put together patient profiles to see which individuals cost more from an insurance point of view – that is to say, which individuals will require medical care most often.
Thus, a male patient between 45 and 55 years of age may require a medical examination, maybe a blood test to check for diabetes or cholesterol. At that age, the individual may also be a likely candidate for various kinds of surgeries and medical tests. He may also need to visit a specialist and require specialised care. All this is expensive.
Insurers also have to keep in mind the inflationary pressures at work. Hospitals increase their room rates and medical charges regularly, the costs of medicines rise, doctors also hike their fees. Naturally, the insurance company will pass the burden of these expenses to its customers; particularly, to those customers who present the highest cost to insure – the older folk.
Seen in this light, it is fair. But not for a healthy 50-year-old like Mr. Kumar. It is a fact that healthy people in older age groups pay premiums that exceed their annual medical costs. Meanwhile, individuals who are sicker and going in-and-out of hospitals gain because their healthcare bills exceed (sometimes, to a great extent) their premium payments.
So, what can Mr. Kumar do to minimise his costs?
1. Certainly, he should maintain his healthy lifestyle.
2. While buying health insurance (or switching plans), he should examine premium projections to understand how much he might have to pay in the coming years.
3. He could also consider shifting to a plan where the premium rise is not too steep, even if it means accepting a few restrictions or exclusions.
4. Whatever the cost, he should not discontinue health insurance altogether or he runs the risk of wiping out his retirement savings if an unexpected medical emergency were to take place.
(The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal)