What is Loading in Health Insurance Policy?

Posted on: May 20, 2022 | | Written by:

What is Loading in Health Insurance Policy?

The additional amount that is charged on your insurance is called loading. In case of a ‘risky’ individual, this amount is added to the premium to provide the cover. Simply put, loading covers the losses that arise from insuring an individual who is prone to a form of risk and the losses for that period are likely to be higher than anticipated. For example, Ramesh and Suresh both have purchased the same health insurance policy. However, Suresh’s premium was substantially higher than Ramesh. The reason for the difference in their premiums is due to the difference in their ages. Therefore, if your age is on the higher side, loading amount will also be higher. So, loading is included when the person insured with a company is comparatively more prone to a sort of risk than in ordinary circumstances. Also, the loading amount is different for different individuals.

Factors affecting loading

Here are a few factors that might affect the amount of loading applied to your policy, and hence your premium.

• Age:

Premium depends on the insurance amount and the type of plan you have chosen. But, one of the main factors that influence the premium amount is your age. The logic behind this is that as your age increases, the probability of mortality increases and this leads to a significant difference between the premiums.

• Smoking:

Cigarette smoking or any other form of tobacco or nicotine consumption is another factor that affects the amount of loading applied to your premiums. Health insurance premium for smokers can be almost double the premium for non-smokers due to an increased risk of smokers getting sick or dying younger.

• Medical history:

Medicalhistory of an individual is another factor that determines the loading applicable to his premiums; especially health insurance premiums. For example, if someone is obese, he/she would have to pay a higher premium because there is a comparatively higher probability of his/her organs like brain, heart, and kidney getting damaged.

Conclusion

Keep the above points in mind when purchasing a health insurance. It is important that you read the policy document of the health insurance carefully. Once you are aware about the terms and conditions of a health insurance, the chances of you getting surprised about any clauses is comparatively less.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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