Do you live in Delhi-NCR, Mumbai, or any other metro city? If yes, chances are that you are paying a higher health insurance premium as compared to a same-aged individual who’s living in Kodaikanal or Tripura. This, despite you guys being in similar health and purchasing the same policy!
Wondering why? Insurers cite higher medical costs, steeper hospitalization rates, and more as the reasons you are being charged higher premiums if you are in zone A, or metro cities. But why does this difference exist, and what does it mean for your health insurance premiums? We decode the fine print.
First off, what are zones?
Almost all health insurance policies offered today are zone-based, meaning that insurers have classified all Indian cities and regions into 3–4 different zones based on the average local healthcare costs there. Typically, since the cost of hospitalization and treatment for any condition or disease would be lower in Meerut as compared to Mumbai, insurers adjust the premium payable accordingly.
These zones vary, depending on the insurer. Consider TATA AIG’s Medicare Premier health insurance policy. As per its brochure:
Zone A includes Mumbai (including Mumbai Metropolitan Region), Delhi (including National Capital Region, Faridabad, Ghaziabad), Ahmedabad, Surat, Baroda, and Hisar
Zone B: Hyderabad (including Secunderabad), Sangareddy, Bengaluru, Kolkata (including Kolkata Metropolitan Area, Howrah, Hoogly), Indore, Gwalior, Chennai, Chandigarh (including Mohali, Panchkula, Zirakpur), Pune (including Pimpri Chinchwad), Rajkot, Gandhinagar, Patan, Mahesana, Sabarkantha, Banaskantha, Junagadh, Navsari, Kheda, Arvalli, Mahisagar, and Surendranagar
Zone C: Rest of India
On the other hand, CARE Insurance’s CARE Supreme plan defines zones as
Zone 1: Delhi NCR, Surat, Mathura, Aligarh;
Zone 2: Mumbai (MMR), Rest of Gujarat;
Zone 3: Pune, Indore, Nashik, Telangana;
Zone 4: Rest of India.
Aditya Birla Health Insurance’s Activ One plan defines zones as:
Zone 1 – Delhi NCR (includes Delhi, Baghpat, Bulandshahr, Gautam Buddha Nagar, Ghaziabad, Hapur, Meerut, Muzaffarnagar, Shamli, Charkhi Dadri, Faridabad, Gurugram, Jhajjar, Jind, Karnal, Mahendragarh, Nuh, Palwal, Panipat, Rewari, Bhiwani, Alwar, Bharatpur, Rohtak, Sonipat, any other city defined by the Govt.) Mumbai Metropolis Area (including Mumbai suburban, Thane, Palghar, Raigad, and any other city defined by the Govt.) Gujarat State, Aligarh, Mathura
Zone 2: Kolkata, Pune, Hyderabad, Chennai, Chandigarh, Mohali, Panchkula, Lucknow, Patna
Zone 3: Rest of India
Hence, it is always a good practice to check your zone with the insurer before buying the policy. There may be slight regional variations that could significantly impact your overall premium payout. For instance, Aditya Birla Health Insurance classifies Gujarat as Zone 1, meaning individuals living there will have to pay high premiums. However, CARE defines Gujarat as Zone-2, meaning slightly lower premiums for policyholders.
How do zones define insurance premiums?
Take, for instance, the Tata Medicare Premier plan. As per their available premium data, a 30-year-old living in Delhi (Zone A), buying this plan, will have to pay Rs 12,083 as an annual premium for a policy with a sum insured of Rs 500,000. The same individual, living in a zone-B city, will have to pay Rs 10,430. And if the same individual resides in a city classified as Zone-C, their premium will come down to Rs 9,002.
Let’s consider another example.
Says Ms. Anita Teli, Chief Compliance Officer, Probus Insurance, “Insurance premiums are heavily influenced by geographical areas because risk varies significantly from one area to another. Insurers group regions into different zones based on factors like accident frequency, crime and theft incidents, population density, the local cost of healthcare, repair costs, and risks from natural disasters such as floods or earthquakes.
Say you are 45 years old and have purchased a Rs 10-lakh Optima Restore health cover from HDFC Ergo. If you live in Delhi, Mumbai, Ahmedabad, or any other tier-1 city, as per the insurer, you’d have to pay Rs 18,693 as an annual premium. The same would come down to Rs. 15,427 if you lived in Tier 2 or anywhere else in India. This change translates into a staggering premium reduction of 17.47%, all because your PIN code changed.
Experts suggest multiple reasons for this steep difference in premiums. Higher cost of living effectively translates into more expensive medical services; not to mention that urban lifestyle patterns, like sedentary jobs, high levels of stress, pollution, and more, also increase the chances of hospitalization, particularly due to respiratory or heart-related conditions.
I pay premiums for zone B. Can I not avail treatment in Zone A hospitals?
Some insurers put co-pay limits in case an individual who resides in Zone B or C opts for treatments in metro cities or regions in Zone A. If your policy has a co-pay condition, it means that you will have to pay a certain, predetermined percentage of the total bill or claim you make out of your pocket.
As per the Manipal Cigna Pro Health Prime Protect policy, “Persons paying Zone I premium can avail treatment all over India without any co-pay. Individuals paying the Zone II premium can avail treatment in Zone II and Zone III without any co-pay.
However, the policy further stipulates that persons paying premiums in Zone 2 and availing treatment in Zone 1 will have to bear 10% of every claim. A person paying the Zone III premium and availing treatment in Zone II will have to bear 10% of every claim. In case they are availing treatment in Zone I, they will have to bear 20% of every claim.
Similarly, Niva Bupa’s Health Premia health cover also imposes a 20% co-payment on individuals who are paying zone-2 premiums but want to avail treatment in zone-1 cities (Mumbai (including Navi Mumbai & Thane), Delhi NCR, Kolkata & Gujarat).
Others, like ICICI Lombard’s Elevate plan, do not levy any zone-based co-pay conditions. However, the same insurer’s Complete Health Insurance plan has a co-pay of up to 16% if those living in zone C (the rest of India) avail treatment in Delhi, Mumbai, etc. (zone A), or NCR (zone D).
Check out these caveats
If you reside at multiple addresses, i.e., have more than one residence, be careful while disclosing them to your insurer. Some insurance companies, like TATA AIG, consider your address (i.e., the place where you ordinarily reside) situated within the highest zone for premium calculation. This means that if you own homes in both Delhi-NCR and Dehradun, you will have to pay premiums based on the zone in which Delhi-NCR is categorized, which is often the highest one.
