When we’re figuring out the price of your health insurance, there are a few different factors we need to think about. Some of them are about you and your lifestyle, and others are about the world around us and what’s happening in the insurance market.
Every insurer works out the cost of health insurance premiums in a slightly different way – but overall, there are four things that make prices a little higher when it’s time to renew. They are, in no particular order: inflation, claims, age, and something called medical inflation. Below, we’ll tell you all about each one and explain why they lead to your premium going up.
When we say ‘inflation’ in money terms, it means the rate at which the cost of things goes up, which means you can’t buy as much for the same amount. It measures the change in the value of money – so for example if you bought a snazzy pair of shoes for £100 a year ago and there’s a 2.4% rise in inflation, today those exact same shoes will be sold for £102.40.
Inflation doesn’t just affect the price of shoes though. It affects health insurance premiums too, so when you think about it this way, it makes sense for yours to go up ever so slightly every year.
If you’ve taken out a private medical insurance policy but haven’t made a claim, when it’s time to renew it you might get a No Claim Discount. This would usually make the price of your premium a little lower. On the other hand, if you have made a claim during your policy term, your premium might be a little bit higher instead. This isn’t always the case though, as every insurer out there does things slightly differently when it comes to a No Claim Discount.
Hey, we’re all getting older. And as we age we gradually get weaker, so it’s more likely that we’ll injure ourselves or get ill. That’s why insurers take our age into account when we take out health insurance – because if we’re a little older, it’s more likely we’ll need to make a claim on it.
Every insurer takes age into account in a slightly different way. Some use age bands, which means everyone who’s aged between 40-50 is in one age band, and 70-80 another age band, and so on. This means that as you get older and move from one age band to the next, the price of your premiums is likely to go up. Some insurers also raise the age-related part of your premium every year, so it happens more gradually rather than a big jump from one age band to another.
Okay – so we know what inflation is, but what is medical inflation?
Medical inflation is the term we use when we’re talking about new trends and advances in medicine – like new treatments and procedures - and the increased costs that come with them.
Medical breakthroughs are great news, of course. It means doctors can treat serious illnesses much more easily and effectively than they could before. But at the same time, new treatments and procedures can be really expensive. And since there’s no easy way to avoid what causes medical inflation, we need to think about the medical inflation rate when we’re figuring out what your premium should be.
There are a few good things about medical inflation. For one, medical breakthroughs lead to better quality treatments that can help treat illnesses more effectively than ever before. Plus, there’s a chance these new technologies could save your life one day – or save the life of someone close to you.
We’ll always aim to offer you the best deal – so we’re constantly reviewing the way we calculate your health insurance premium. If you’d like to have a chat with us about your existing policy, feel free to give us a call and we’ll be happy to talk you through the reasons why your premium might have gone up.