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eased some data pertaining to life expectancy across the world. Its staistics show that the average Indian's life expectancy has gone up from 61 years in 2000 to 65 in 2009. As life expectancy increases, so does the need for a plan to take care of healthcare costs for over a long period. One of the cheapest ways to do this is to buy a health cover. However, even with a health insurance policy , there are factors that could push up the cost. One of them is the loading applicable on premiums upon renewal.

LOADING ON PREMIUMS

Loading usually refers to the percentage increase in your premium in the event of a claim. So at the time of buying your policy, study the 'loading' aspect to ascertain how claims made by you could affect the subsequent years' premium payable. Most policies - from both public and private sector insurers - come with this clause. Therefore, make sure you compare, among other things, the loading structure of various companies before you zero in on the one best suited to your needs.

TYPES OF LOADING

Loading could be primarily in two forms - one based on the risk as assessed by the insurer and the other linked to claims. "With underwriting-linked loading, usually, where there is an adverse medical history or say a habit like smoking, the insurer takes into account the number of cigarettes consumed per day and arrives at the risk as per its underwriting practices," says Shreeraj Deshpande, head, health insurance, Future Generali. "Likewise, in the case of certain pre-existing diseases, loading will come into picture if the perceived risk is high. It is generally done in line with the loading parameters filed by the company with the insurance regulator."

The more relevant one during the life of the policy, however, will be the claims loading. Here, upon renewal post a claim in the previous year, the premium sees a spike in line with the parameters and calculations mentioned in the policy document. "Being a yearly contract, the loading policy on claims, in the past, was fixed by insurers as per their discretion in case of an adverse claims experience. However, in the past couple of years, almost every insurer has introduced specific claims-loading clause in their mediclaim policies," says Mahavir Chopra, head, e-business, Medimanage Insurance Brokers.

While there is no uniform procedure adopted by health insurers, they could load premiums as per the claims ratio, claims to sum insured ratio and claims based on chronic or nonown norms. Also, as per IRDA guidelines, the details have to be mentioned in the policy documents. "In case of claims-based loading, it may not be a correct approach to load premiums at the time of renewals just because of a single claim, whatever the amount, in an expiring policy. In our case, the loading comes into play if say the insured has made more than three claims in three years," says Deshpande of Future Generali.

Source : ET Bureau