Understanding Loading in Health Insurance

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Health insurance is a contract between you and the insurer, who promises to cover your hospitalisation expenses in exchange for the premiums you pay.

The standard premiums published in the brochure of the plan are calculated based on assumptions of covering a healthy, fit person with a healthy lifestyle (also called “standard risk”).

Now, if the insurance company receives an application for covering an individual with say multiple health conditions, then the insurer may decide to charge a higher premium to cover this higher risk (“non-standard risk”). This additional premium charged for non standard risk under health insurance parlance is called “loading” or “underwriting loading”.

In this article, let’s understand what loading exactly is, the factors that affect loading, and more.

Let’s dive right in!

What Is Loading?

Loading is the extra premium charged by an insurer, in case you have health conditions or medical history or a lifestyle that makes you a higher risk for the insurance company than what is usually acceptable.

Whether or not the insurer will apply loading on your health insurance premium will depend on several factors. Let’s take a look at these factors.

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Factors That Affect Loading

  • Health Status

    The insurance company may apply loading charges if you are obese or have a medical history of certain illnesses, diseases, surgeries, other medical issues, etc.

    Let’s say two friends Raj and Ram belong to the same age group. Ram is healthy - and doesn't suffer from any medical issues. Raj, however, is obese and suffers from diabetes and high blood pressure. In this case, Raj will have to pay a loading hence a likely higher premium compared to Ram.

  • Lifestyle

    It is riskier to cover individuals who smoke, consume alcohol, etc. daily because these activities increase the chances of lung infections, cancer, and other illnesses. These, in turn, increase the possibility of a claim under the health insurance policy. Hence, the insurance company may apply loading charges if you smoke, drink, etc.

  • Occupation

    The insurance company may apply a loading on your health insurance premiums if your occupation includes work that is risky or dangerous to your health. For instance, if you are a professional racer, work in an underground mine, or are engaged in activities like paragliding, bungee jumping, kayaking, canoeing, and so on.

    Let’s say Shivya and Kanika both are 30 years old and want to buy a health insurance policy with a sum insured of Rs. 7.5 Lakhs. Shivya is a teacher, whereas Kanika is a professional racer. So, in this case, the health insurance premium of Shivya will be lower compared to Kanika. This is because Shivya belongs to a low-risk profession whereas Kanika is involved in a high-risk one.

  • Please note: Your age can have an impact on loading when combined with other health conditions.

    For instance, Riya, 30, and her father, 60, both have hypertension. They both decide to buy separate health insurance plans for themselves. In this case, the insurance company will apply a higher loading on Riya’s policy than on her father’s policy. Why? Because Riya has the condition at a very young age which could be lifestyle related, whereas her father's condition will be considered an age-related illness. So, from an insurer's perspective, Riya is a higher risk to cover than her father.

  • Besides the factors we have mentioned above, there may be other factors that may affect loading. The T&Cs for applying loading on premiums may vary across insurance companies.

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How is Loading Applied?

  • When you purchase health insurance, you will have to select the sum insured as per your requirements and fill out a proposal form which will include all your personal details as well as your medical history including pre-existing illnesses (if any).
  • Once this is done, you will be directed to the payment page where you can make the payment. After the transaction is complete, you will get a confirmation mail from your insurer with the details of your policy.
  • If you have any pre-existing illness or any habits like smoking or drinking alcohol mentioned in the proposal form, the insurer may apply loading. It can be applied either by -
  • Decreasing the sum insured for the same premium that you have paid, or
  • Charging an additional premium.
  • This is called a counter offer, which will be sent to you via mail. You can approve the offer by signing it. The insurer will then make changes to the policy accordingly and send it to you
  • If you are not okay with the offer and deny it, the policy will be considered null and void. The premium paid by you will be refunded as per the terms and conditions of the insurer.

Wrapping Up!

So, that is all about loading in health insurance. Loading is the extra amount charged by insurance companies. It comes into play if they are dealing with individuals who may be at higher risk due to certain factors, like age, occupation, health status, etc. To provide a health insurance cover to such individuals, they will apply loading.