What Factors Affect the Cost of Individual Health Insurance?

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  • Written By: Leonardo Von Navorski
  • Edited By: Daniel Lindley
  • Last Modified Date: 02 September 2019
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Many factors affect the cost of individual health insurance, including one's occupation, age, locale, general health history, and the benefits, exclusions, and deductibles associated with the individual health insurance plan. The factors affecting the cost are similar to the factors that influence the cost of group health insurance. Additionally, other external factors affect health insurance premiums, such as medical costs, the cost of complying with regulations, and the company's overall operating costs.

An insurance company may use one's occupation as a determinant when calculating the premium based on the risk factor of the occupation. For example, an applicant in a high-risk field may have to pay higher premiums than an applicant in a relatively low-risk field. Insurance companies employ risk assessors and use computer algorithms to determine premiums.

An applicant's locale or geography has a similar effect as one's occupation. For example, if residents of a particular area have a higher likelihood of developing illnesses caused by environmental problems, such as air pollution, then everyone in the area may have to pay a higher premium. Applicants' general health also gives insurance companies an idea of the long-term costs associated with providing health care.


A relatively healthy person is likely to cost the company less money than an unhealthy person, which usually results in a premium difference. A person's medical history is also factored in when determining the cost of individual health insurance. If an applicant has a history of illnesses, the premium may be slightly higher. Other factors, such as pre-existing conditions that require immediate treatment and coverage, are also considered in the health plan cost.

One of the most important factors that determines the cost of individual health insurance is the level of the health plan. A health plan that covers fewer items, or has relatively low caps, will likely have a lower premium than a healthcare plan that covers more and has higher limits. Additionally, the plan's deductible or co-pay cost also plays a factor in the cost of individual health insurance.


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