Health insurance: Health insurance premiums have seen a sharp rise recently, prompting many people to either cancel their policies or switch to different insurers. But did you know that the premium amount also depends on the city you live in? If you are in a metro city, you will likely pay a higher premium compared to someone living in a smaller town. Here's why location plays a key role in how insurance companies determine your premium.
Premium not decided only on basis of age
Insurance premium is not decided only on your age, medical history or insurance amount. It also depends on something that you may not have considered. Insurance expert Nikhil Jha said that health insurance premium is also decided on the basis of where you live. The city plays a huge role in determining the premium. "In India, insurers categorise cities into different zones based on risk factors like medical costs, claim frequency, and healthcare expenses. Your zone impacts the premium you pay," he said.
Higher premiums in metro cities
According to Jha, a person living in Delhi may have to pay a much higher premium than someone living in a smaller city. Insurance companies classify cities into three zones based on health costs, claims and medical expenses.
Zone Classification:
- Zone A (Highest premium) – Metro cities like Delhi, Mumbai, Kolkata, Chennai.
- Zone B – Tier-1 and Tier-2 cities.
- Zone C (Lowest premium) – Tier-3 cities and rural areas.
Why does this matter?
- Healthcare is more expensive in metros, so claim amounts are generally higher.
- Urban areas tend to have higher claims due to population density and lifestyle diseases.
- Higher risk in cities makes underwriting more expensive for insurers.
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