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What is Loading In Health Insurance Policies

06 June 2022, 9:32 PM

Health insurance is a contract between a health insurance company and a policyholder. The insurer offers a health cover and promises to pay the health insurance bills of the policyholder. In return, the policyholder pays a premium for the risk the insurance provider takes to cover the medical bills. 

While most people are categorised under a general risk profile, some people are considered to carry greater risk. This is why the health insurance companies charge a higher premium to some people as they are more likely to make claims. And, this increases the risk the health insurer takes to cover them. This is known as loading. Take a look at this article to know more about loading and how it affects your health insurance policy premium rates.

Understand the Concept of Loading in Health Insurance? 

When a person has a higher risk associated with him, the health insurance company charges a higher premium. The factors that affect loading include:

  1. Age 
    Age is one of the top-most reasons for attaching loading to the premium of a health insurance plan. This is because with age a person’s health becomes more and more fragile. He or she is then more likely to require medical attention frequently. A very obvious consequence would be an increase in health insurance claims. Keeping these factors in mind, an elderly person has to pay a higher premium owing to the component of loading.
  2. Health Conditions 
    Then, the overall health condition of a person also plays a role. A young and fit person will not be charged a high premium with loading. But a person who is sickly and has certain pre-existing disorders is more likely to make frequent claims on the health plan. This is why such a person is charged a higher premium with the addition of the loading amount.
  3. Smoking Habit 
    A smoker destroys his own health. Smokers are likely to contract diseases such as cancer, hypertension, asthma, etc. This will make them unwell and they will require the health insurance cover. This is why a smoker is considered to have a risky profile and is charged the loading amount along with the premium. 
  4. Obesity 
    Obesity is mainly a lifestyle disorder that causes severe health problems and can also be fatal. Overweight people, who fall in the obese category, are seen as highly risky people who are very likely to make health insurance claims. This is why you will be asked to pay the loading amount along with your regular health insurance premium if you are obese.  
  5. Occupation 
    Many people who engage in hazardous occupations, such as firefighters or racers, are charged a loading amount in health insurance. This happens because these people face injuries and accidents regularly while they work. This leads to frequent hospitalisation and subsequent health insurance claims. As a result, the insurer categorises them as risky policyholders and attach the loading amount to their health insurance premiums.  
  6. Place of Residency 
    Oftentimes, people living in the large cities are charged loading. A 35-year-old person living in Mumbai will pay a higher premium than a 35-year-old living in Khandala. This is because city life brings about various health problems due to higher pollution levels, lifestyle disorders, etc.

These are some of the main reasons why a person is charged loading on their health insurance premium rates.

The Final Word

There is a lot of debate going on about loading and whether it is ethical to attach loading or not. While some people do end up paying extra due to loading, we cannot ignore the fact that the health insurance companies also need to look towards making some profit. The ideal situation is to strike a balance. If you feel the loading amount offered to you is too much, speak to your insurance provider and try to negotiate. If it doesn't work out, explore other options and find the best plan at the best rate.

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