Health Insurance Costs in India: What Affects Your Premium?

Health insurance has far transformed from a luxury into a necessity in 2026. With rising diseases and medical inflation buying good, affordable health insurance is important. 

But, with so many options available with different premiums, how do you choose the financially feasible one? In this blog, we will help decode what affects the cost of health insurance policy in India in 2026.

What Factors Affect the Cost of Health Insurance in India?

1. Age

One of the major factors which determines your premium amount is your age. Whenever you go to buy insurance, age is the first question they ask. This is because the older you get, the higher the premium amount you have to pay.

For example, if you are a 40-year-old individual, you may have to pay Rs. 10,500 per year for coverage of Rs. 10 lakhs. However, if you are 21 years of age, your premium amount will be Rs. 9,000 per year for the same plan and coverage.

Insurance companies understand that a higher age means higher chances of disease and insurance claims. So, to provide you with coverage appropriate for your age, they charge considerable premiums.

2. Your Location

India is a diverse country with different areas having different access. Therefore, your location plays a major part in deciding the cost of health insurance. In Tier 1 cities, your premium tends to be higher than in Tier 2 or 3 cities.

The reason behind this difference is that health care facilities in metro cities tend to be costlier than those in other areas. Therefore, to provide you with adequate coverage, companies charge different premiums based on your location.

3. Plan Type

Health insurance companies in India understand the diverse needs of the country. Therefore, they offer diverse plans catered to specific issues. Moreover, each plan has different coverage options and benefits, ultimately affecting the cost of health insurance.

For example, a medical insurance for family can give you coverage of up to Rs. 1 crore with benefits such as PED buy-back options, long-term discounts, and midterm inclusion.

On the other hand, a critical illness health insurance will provide coverage of up to Rs. 25 lakhs with other benefits.

4. Coverage Amount

The higher the coverage, the higher the premiums you have to pay. This is because higher coverage often accompanies more benefits, as compared to lower sum insured. Therefore, insurance companies charge more for high coverage.

Let us understand this through an example. For a coverage of Rs. 10 lakhs, you will have to pay roughly Rs. 9,758/year. However, for a Rs. 1 crore coverage, the premium amount rises to Rs. 15,811/year.

5. Family Size

Another crucial factor affecting the cost of health insurance is the size of your family. Suppose you buy a single health insurance policy covering you at 29 years of age. But after 2 years, you get married and add them to your plan. In that scenario, your premiums will increase to cover your spouse.

Moreover, if the eldest member of your family covered under insurance crosses 50 years of age, the chance of premiums getting higher increases. It is because older people are more likely to get sick and make claims.

6. Add-Ons

Add-ons refer to additional coverage outside the health insurance. You can buy these to customise your plans according to your needs by paying a fixed amount. These are extremely beneficial for people, providing coverage without having to buy a second health insurance.

For example, if you take a woman’s care add-on to a Rs. 20 lakh insurance policy, you will have to pay Rs. 918 extras. Conversely, if you opt for a coronary artery disease add-on coverage, you will have to pay Rs. 5,606 extras.

Therefore, add-ons affect the cost of health insurance.

7. Personal Health

Lastly, your health also plays a vital part in deciding your premiums. Leading a healthy lifestyle helps to reduce your premiums greatly. Some insurance companies also give you additional discounts if you lead a healthy lifestyle.

For instance, smoking can increase your premium amounts as insurance companies consider you a high-risk individual!

What Factors Do Not Increase the Cost of Health Insurance?

1. Gender

Your gender does not affect your premiums. Whether you are a man, woman, or others, you will be charged the same premium on a health insurance plan.

2. Occupation

Your occupation, too, does not affect the cost of health insurance. Generally, your health and other factors mentioned above play a vital role in deciding your premiums.

3. Race or Ethnicity

A common misconception is that your race or ethnicity can influence the premium you pay. This is untrue as insurance companies do not discriminate against any ethnicity.

Final Words

Your health and age are the primary factors affecting the cost of health insurance in India. Therefore, when buying a new plan, consider the factors discussed here and choose the best option feasible for your finances and family members’ health.