Group Health Insurance Premium – How to Calculate?

Can you guess what the biggest asset for a company is? The employees! πŸ§‘β€πŸ­ Yes, that’s correct. Can you imagine a business running without the hard work of its employees? Thus, all employers must compensate their employees adequately and make special provisions to ensure their welfare. Although the role of salary and other allowances πŸ’° cannot be undermined, it is equally essential to provide additional welfare options like recreation, leave travel allowance, and insurance.

Yes. A group health insurance can ensure the availability of good healthcare facilities for the employees and their families. But there is a premium cost involved while purchasing a group health insurance. This article tries to cover all the factors that affect the group health insurance premium.

What is Group Health Insurance?

Group health insurance or group medical insurance is a health policy that caters to people. Employers can purchase group health insurance for the employees and their families. By including this compensation, you can elevate the level of security πŸ›‘οΈ within your employees. Group health insurance is not limited to corporates. Any individual can purchase a group health insurance that covers their family and in-laws πŸ‘ͺ.

The policy is for a fixed period, after which it can be renewed by paying the premium amount. The maximum coverage per head is pre-defined, and if any of your employees need medical assistance, they can get reimbursed up to their available coverage amount. Avail affordable group health insurance for small companies and startups from Plum Insurance.

Which Factors Affect the Calculation of Group Health Insurance Premium?

Many factors affect the premium amount chargeable for group health insurance calculation. But, we can group them primarily into six categories. Let’s dive deeper and understand each of them.

  • Average Age of Employees πŸ”ž

The concept of health insurance is based on the health of an individual. So, it is important to evaluate the chances of people insured by the policy falling ill. It is assumed that the higher the employee age, the higher are the chances of him/her needing medical assistance.

In the case of Group Health Insurance πŸ‘¨β€βš•οΈ, the average age is considered. With the help of the average employee’s age, it is possible to guess the probability of the number of insurance claims. For Ex:


 Company XCompany Y
Average Employee Age2833
Insurance PremiumLowerHigher
  • Policy Value πŸ’΅

The premium charged for an insurance policy also depends on the sum assured or the policy value. If the sum insured of a policy is higher, then the premium charged is also higher. In the case of Group Health policies, the policy value is the total of the insured amount for each employee. For Ex:

 Company XCompany Y
Average Employee Cover7 Lakhs10 Lakhs
Insurance PremiumLowerHigher
  • Add-on Covers βž•

Add-on covers provide additional covers for events that are not covered in the standard policy. Since the scope of the policy coverage is increased due to the add-on covers, the premium charged for adding this feature to your policy is also higher. The employer can choose various add-on covers including OPD Charges, For Ex:

 Company XCompany Y
Add-on CoversYesNo
Insurance PremiumHigherLower
  • Number of People Insured πŸ‘¨β€πŸ‘©β€πŸ‘§β€πŸ‘§

The number of people that avail benefits of a group insurance policy are considered for calculating the premium amount chargeable. A group medical policy can also contain cover for the family and in-laws of the employee as well. This can increase the liability of the insurance company.

The reason is that there are chances of a higher number of insurance claims if the number of beneficiaries in a policy is higher. This is relevant only for group health insurance policies. It doesn’t apply to individual insurances. For Ex:

 Company XCompany Y
Number of Beneficiaries10050
Insurance PremiumHigherLower
  • History of Insurance Claims πŸ‘΄

Suppose the employer has already taken an insurance policy and wants to renew it. In that case, the history of insurance claims are also considered in working out the amount of premium chargeable. The claim history allows the insurer to assess the risk involved. If the insurance claims are higher for the employer, the premium charged is higher. For example:

 Company XCompany Y
Number of Claims1020
Insurance PremiumLowerHigher
  • Nature of the Job πŸ’₯πŸš’

If performing a job involves high degrees of risk, the probability of such an employee requiring medical attention will be higher. Similarly, people with less risky jobs usually remain healthy. Thus, the insurance premium is calculated after considering the effect of job risk. If the risk involved is higher, the premium is also higher. For Ex:

 Company XCompany Y
Nature of JobOffice ManagerMachine Labour
Insurance PremiumLowerHigher

The overall premium chargeable on a group health policy is calculated after considering all these factors. Insurers also provide package policies where the coverage terms are pre-defined. This makes it easier for the employer to choose the best insurance policy.

Why is Group Medical Insurance for You?

There are many benefits of a group health policy. Here are some of the major reasons that make it attractive:

  1. Employee Morale πŸ€—: By addressing the concern towards the welfare of your employees and their families, you can boost the morale of your workforce. A motivated employee can work more efficiently.
  2. Reduce Employee Turnover πŸƒβ€β™‚οΈ: Employees tend to serve longer in organizations that respect their needs and feelings. By ensuring that they receive good medical facilities in times of need, you can discourage a higher employee turnover.
  3. Tax Benefits πŸ€‘: The premium paid for buying group health policy is allowed as a deduction from the company’s total income. Hence, you can save taxes while ensuring your employee welfare.

Why Choose Plum Insurance 🧐?

Plum insurance provides an online platform πŸ’» that links various insurance companies with employers who wish to buy group medical insurance. By choosing Plum insurance, you can easily access your policies online in real-time, along with the benefit of attractive premium rates. Get Started πŸ‘ˆ with Plum Insurance now at https://www.plumhq.com/