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Cities in India are classified into three tiers according to their population. While this classification was implemented for allocating House Rent Allowance, it has several other uses as well. One of the most significant uses is the cost of health insurance policies.
Yes, that’s right!
Your health and the sum insured under your healthcare policy are not the only factors that help lower your premium payment towards your policy. The city where you reside plays an important role in determining the cost of your insurance policy. This categorisation is known as zone-based health insurance.
It is common knowledge that healthcare in larger metropolitan cities costs more than that in smaller cities. That is why insurance providers have curated different health insurance zones to make seeking healthcare more affordable for those in smaller cities.
But, what does the word “zone” in this respect mean?
A zone is basically a specific area that is different from other areas based on certain factors, such as geography, population, lifestyle, time, etc. However, in the case of health insurance policy, it is divided on the basis of the cost of healthcare.
India is divided into three zones: Zone A, Zone B, and Zone C. These zones are divided based on the population of the cities and other factors. With zone-based insurance plans, the premiums paid to the insurers are decided according to the expenses in different cities.
The different types of health insurance zones in India are:
As you now know, the zones in India are classified into 3 categories, but in the case of health insurance, the classification of different cities can differ from one insurer to another.
At Digit, our health insurance premiums vary based on healthcare costs across different cities. For convenience, they are split into two zones: Zone 1 and Zone 2 health insurance.
Now that you are familiar with the list of health insurance zones, let's talk about the many advantages that come with a zone-based health plan:
In cities located in Zone 1, where medical care costs are also expected to be higher, health insurance premiums are often higher. Understanding the workings of zone-based health insurance is crucial for effectively utilizing its benefits:
Regions are divided into zones based on healthcare costs and economic factors. Each zone represents areas with similar cost structures, making premium calculations more precise.
Premiums are set according to the average healthcare costs within each zone. Higher-cost zones will have higher premiums, reflecting the increased cost of medical services.
Policyholders are assigned to different zones based on their residential addresses. They receive premium rates and coverage options tailored to their specific zones.
Benefits and coverage information are linked to each zone's average healthcare requirements and expenses. This guarantees that clients don't overpay for needless coverage while yet receiving sufficient protection.
We live in a nation where cities vary from one another in many ways. These disparities may relate to the environment, the economy, or even the infrastructure. In addition, there are variations in the cost of living.
Additionally, the cost of medical bills differs from city to city, so zone-based health insurance is essential.
One major advantage of zone-based health insurance is that it reduces the premium paid for health insurance policies by 10% to 20%, which differs from policy to policy. Thus, people who live in lower-cost areas consequently benefit from the variation in health insurance.
For Example: If you are a resident of Delhi (Zone A city), you might have to pay up to Rs. 6,448 as a premium for insurance of Rs. 10 Lakh, which would have been available to you at around Rs. 5,882 if you were residing in Surat (Zone B city).
Let’s understand how the health insurance premium works for different zones and clauses.
Assume Akash (age 27) has a health insurance policy and resides in Dehradun (Zone 2). For this policy, he pays a premium of Rs. 5000 for a sum insured of Rs. 12000:
Disclaimer: The prices mentioned above are indicative and may vary based on the standard health insurance plan chosen. Variation may arise due to zone-based pricing, co-payment clauses, or specific terms set by different insurers. Remember to read your policy document.
Suppose you are a resident of Meerut, but due to work, you will have to relocate to Mumbai. So, if you are planning to buy a health insurance policy, you can avail yourself of the zone upgrade coverage and upgrade your zone from Meerut to Mumbai.
Since treatment costs are higher in Mumbai (Zone A city) than Meerut (Zone B city), the insurance company will adjust your premium payment accordingly and you will have to pay a higher premium.
Some insurance policies limit coverage when the policyholder moves from a Zone C insurance city to a Zone B or Zone A city insurance.
In such cases of zone-based health insurance policy, the insurance provider mostly levies a co-payment clause, where the insured individual has to pay a portion of their expenses incurred towards healthcare.
Insurance providers like Digit Insurance offer zone upgrade add-ons that allow policyholders to avail the benefits of upgrading their health insurance policies according to the treatment costs in their cities.
For instance, if you are a resident of a Zone 2 city and have a health insurance policy suitable for covering the treatment cost in that city only, you can avail the Zone-Upgrade add-on to make it suitable for treatment expenses in Zone 1 cities.
With this upgrade, you can avail a higher coverage under your insurance policy if you wish to seek treatment at Zone 1 cities. You can simply opt for this add-on cover and get a zone-based upgrade to your plan.
When it comes to seeking competitive medical treatment, Zone A cities are preferred by most. Even though they are more expensive than Zone B, you can seek the most advanced healthcare in these cities. The cost of treatment in these cities is, thus, automatically higher than in the other zones.
Reasons why Zone A is Better than Zone B:
Even though Zone A is better in terms of treatment, it also means higher costs and premium payments towards the health insurance policy. But, this problem can be solved by simply availing the zone upgrade cover. You can simply upgrade your existing policy by paying an extra premium towards it.
Various factors affect zone-based health insurance premiums. Here are some of them:
Getting an add-on zone-based health insurance policy can be beneficial because it allows you to save a substantial amount on your premium payment for your healthcare policy.
But, it is important to look through the terms put forth by this provision of your healthcare policy to make sure that you are well-aware of what you are getting into!
So, research well, check through the policy terms and make your health insurance policy even more beneficial with the zone-based pricing provision!
Life is uncertain! You never know when personal or professional reasons might lead you to change cities. Health insurance zone upgrade ensures that your health is always safeguarded no matter where life takes you.
Choose wisely, and stay protected wherever you go!
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