How we calculate your insurance premium
Insurance premiums are not the most exciting of subjects but it’s essential to let you know how we calculate the premium for your health insurance.
What is an insurance premium?
An insurance premium is just a technical term for the price you pay for coverage under an insurance policy. Usually, insurance companies give you a monthly or yearly premium. Sometimes you can pay quarterly or half-yearly. It depends on what’s available and how you prefer to pay.
You can see how premiums work by getting a quick online quote. You’ll see that your premium depends on the plan you select and what options you select.
You may also need to pay taxes and service fees on top of your premium, depending on where you live and from which insurance company you’ve purchased a plan. Providers do not usually include charges like taxes and services in the premium. Annoyingly, tax can be as high as 20% in some countries, so make sure you check first to avoid nasty surprises!
Insurance premium + tax + service fees = the amount you have to pay
At William Russell, we don’t charge a service fee. But you may still have to pay insurance premium tax if you’re living in the UK or a country in the European Union. We’ll always let you know what taxes you have to pay before you part with any cash.
How do you calculate my premium?
We calculate your premiums based on your circumstances. These include your age, where you live, whether you wish to have your family on your plan, and how much coverage you want.
We also take into account ‘baseline risk factors’ affecting the cost of private healthcare around the world. These factors include:
- events such as the COVID-19 pandemic
- and the cost of expensive and lengthy new drug and treatment therapies
At William Russell, we approach premiums differently. We’re a small insurance provider relative to the global insurance conglomerates. Now, for our members, that’s great! We can provide a much more personal level of service, which means you don’t get passed around a call centre when you telephone us, and you don’t wait for weeks on end for a reply to your email.
But it also means we have to be very careful when we calculate premiums. The insurance conglomerates work on a much bigger scale, and they can always rely on their instant brand appeal if they crank up prices. We’re smaller, so our members and the brokers we work with are much more sensitive to premium increases.
Because of this, it’s in our interests to keep your premium increases low. So we work closely with our insurer to make sure you don’t have a nasty shock when you receive your Renewal Invitation each year.
Some rules that we live by
- Premiums increase as you get older
- For most members, making claims does not affect your premium (see below for more information)
- But where you live does make a difference
- Your premium depends on how much coverage you want
- We take into account national, regional, and global factors affecting the cost of private healthcare
- We don’t use dynamic pricing
- We don’t check your credit score, and it won’t affect your premium
Your premiums increase as you get older
Typically, your age-related premium increase will be around 3% until you reach age 65. This percentage can be higher or lower depending on where you live, and the percentage increase will get sharper as you get older. Between the ages of 65 and 80, your age-related premium increase will be no higher than 6%.
Age is not the only factor that affects your premiums. Where you live, how much coverage you want, and the cost of private healthcare also make a difference. So, your total premium increase will be higher than your age-related premium increase.
For most members, your claims won’t affect your premium
Unlike some providers, we won’t increase your renewal premium if you’ve made a claim. Members purchase an insurance policy in good faith, so we don’t think it’s fair to penalise them for legitimate claims.
Instead, we use what’s known as a community-based model. We average the money we pay out in claims across all our members, so no one person or group of people has to suffer.
Thing are slightly different for members living in Hong Kong. Private healthcare is so expensive in Hong Kong that we have no choice but to take into account our members’ claiming habits when we calculate their premium.
Your premium depends on the country where you live
Premiums for health insurance are higher in countries where private healthcare is more expensive. So, how do we know which countries are the most costliest?
For nearly 30 years, we’ve worked closely with the leading private hospitals and clinics in pretty much every country on the planet. We know the doctors and specialists, we know how they like to work, and we know how much they charge for different medical treatments.
When we compare these charges to global averages, we begin to paint a picture of which cities, countries, and regions are expensive and which are cheaper. We have decades’ worth of claims and medical data to inform our pricing model.
Our pricing model divides countries into categories based on how expensive private healthcare is. At our last count, we have more than 100 categories. It sounds complicated, but it’s great for our members. If you’re living in Malaysia, we don’t want you to pay over the odds for your health insurance just because private healthcare happens to be expensive in neighbouring Singapore.
Of course, things change all the time. The cost of private healthcare in a country or region can skyrocket very quickly. Treatment for medical conditions in Hong Kong, Singapore, and some cities in Thailand is now almost as expensive as similar treatment in Switzerland and the United States of America. That simply wasn’t the case when we started in the 1990s.
It’s also true that international health insurance gives you cover for medical treatment in multiple countries, so we don’t calculate your premium just according to the country in which you’re living. For example, residents of Indonesia typically travel to Singapore for elective hospital treatment.
We don’t use dynamic pricing to calculate your premium
Some businesses alter the prices you see for a product depending on the time of day, how many times you’ve visited their website, and how many other people are looking at that product. We don’t do this. Our prices are fixed for each calendar year.
Your credit rating doesn’t affect your premium
Unlike some providers, we don’t check your credit rating when you purchase a plan or renew your plan.
Your premium depends on how much coverage you want
Naturally, if you want more generous coverage, you’ll have to pay a higher premium. If you want health insurance with a low excess and all the bells and whistles, you’ll have to pay more. Conversely, a plan with capped limits and fewer options won’t cost you so much.
For us, the most important thing is that you have the cover that you need. We’re not going to spam you with ‘upselling’ you when you’re our member, and we don’t encourage you to purchase a more expensive plan. We’re just happy to have you as a member.
We know international health insurance is costly, so we’ve put together a quick guide on how you can keep your premiums low.
We take into account national, regional, and global factors affecting the cost of private healthcare
We mentioned earlier something about ‘baseline risk factors’. These are trends and patterns that affect your premium, irrespective of your circumstances.
Think about your car insurance. Of course, your age and how much your car costs are going to affect your premium. But if the government decides that they’re not going to repair the roads for the next ten years, or that they’re going to decriminalise drink driving, then the risk landscape changes—even though nothing about your circumstances has changed.
It’s the same thing with international health insurance. Unfortunately, there are plenty of these national, regional, and global trends and patterns which are nothing to do with you at all. We’ve put together a list of the main ones that are likely to affect your premium.
- Medical inflation – The inflation rate for private healthcare is consistently higher than general inflation. The ever-increasing demand for healthcare means that hospitals and clinics can charge higher prices. The costs of drugs and new sophisticated diagnostics procedures and treatments also drive up costs.
- Cancer treatment costs – Increasing life spans means that more people will have cancer at some point in their lives. Substantial investment in developing safer and more effective therapies has improved treatment outcomes. However, these therapies are often costly and can run for many years.
- NextGen drug therapies – There are exciting advances in the field of medical technology, which are improving healthcare outcomes, but these are extremely expensive.
- COVID-19 – The pandemic has caused unprecedented disruption and placed an extraordinary strain on healthcare systems around the world. It’s a standard view that this strain will adversely affect hospital prices as they try to recover from COVID-19 disruption in the coming year.
Making sure we’re fair to our members
Unlike other insurance providers, it’s in our interests to keep premium increases low.
Private healthcare is expensive, and, as costs go up, health insurance premiums have to keep pace. We do everything possible to keep premium increases to an absolute minimum, and we’re completely transparent about how we calculate your premiums.
We have a team working on improving the fairness of our pricing model, and we always give you plenty of options to help reduce your premium.
Even still, we know premiums from all insurance providers are expensive. For our part, we like to make sure you’re getting the best possible service from us. Increasingly, insurers are relying on self-service, AI, and Big Data to do the work for them. We think differently. Healthcare is a highly personal experience, so it deserves a personal service. We’re a team of real people, at the end of a phone call when you need us.
We’re here to help you control costs
We build our plans to help you control your premium. We have cost-effective plans, excesses with good discounts, smaller areas of cover, and optional benefit limits. These options can help you reduce the amount you spend on health insurance each month or year.
We also have a fantastic team in place who are here to help you during your plan, when it’s time to renew, or when you need medical treatment. We’re smaller than the global insurance conglomerates, but we like it that way: we can give each of our members much more attention.
Our money-back guarantee
Whether you’re purchasing a new plan or you’re renewing your current plan, you can cancel it for any reason within 30 days. We’ll give you a full refund, provided you haven’t claimed.
We know it’s tough out there, what with restrictions on personal freedom, impending economic recession, and everything else the COVID-19 pandemic entails. We’re here to help you through, so if you want to discuss your plan with us, please get in touch! We’ll be happy to help.