Why do Health Insurance Premiums increase every year?

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Health insurance is not optional in the UAE. Being a legal requirement, you need to have a proper health insurance plan at all times. Employers in Abu Dhabi and Dubai are required to provide their employees with at least essential benefits plan. But since these plans offer only the most basic medical insurance benefits, many people choose to buy a private health insurance plan for their families and themselves. This brings us to the main thing – the increment in the price of the premium of your health insurance plan. Many policyholders note that their premium increases every year significantly. Does medical insurance premium increase every year for real though? Does this apply to all the insurance policies alike? If that is the case indeed then, how much do health insurance premiums increase each year? Let’s figure all these important things related to your health insurance plan.

Does Health Insurance Premium Go Up Every Year?

Despite popular belief, health insurance premiums do not necessarily go up every year. Meaning, there is no official rule that your health insurance provider has the right to charge you an additional premium upon every renewal. It could be the case that a particular policyholder sees an increment in their premium come to every renewal but that is more of a case-by-case scenario. The reasons for your health insurance premiums to increase are more related to your lifestyle, health conditions, and inflation in the healthcare industry.

What Leads to Higher Health Insurance Premiums on Renewal

Several factors can influence the prices of health insurance premiums in general. Some of these factors affect every policyholder equally while others are more related to the individual performance of each person. Given below is a quick rundown of these factors:

Inflation in Healthcare Services Rates

It may come off as a surprise but the healthcare sector sees high inflation rates. Medical services and equipment, both are witnessing incredible growth and advancements, true. But this development is leading the charge to inflation in the prices of common healthcare services for the people in general, all over the world. Since your health insurance plan takes on the task to cover many of your treatments and procedures, the premium of the plan rises with the rise in the price of healthcare services in the area.

Claim History of Your Plan

Health insurance is a risk pool business. The more risk you bring in for the insurance provider, the higher they will have to charge you in form of the premium to cover that risk. Premium is essentially the fee or compensation a policyholder pays to the insurance provider in return for taking on the risk of handling the expenses of their treatments. If your claim history is laden with health insurance claims, you will become a high-risk customer for the insurance provider. Hence, the premium increases for you. This logic works the other way around as well. Making no claims in a particular year or for a few consecutive years earns additional benefits like unchanged premium amount and higher sum assured. This is because you are perceived as a low-risk customer.

Age of the Policyholder

Older age brings in the peace of retirement but it also brings in the increased risk of health issues. The more susceptible you are to falling ill; the higher risk you pose to the providers. This is why age is a common factor that increases premium prices for all policyholders alike. You can be 50 and healthier than your 25-year-old child but the insurance premium of your plan will still increase a bit. The reason for that is simple. There is no set algorithm to define who gets more susceptible to illnesses and at what age. So, all insurance companies choose a common formula for all their customers, to keep the increment fair.

Addition in Coverage Benefits

At any point, if you happen to add a few small or big things to your health insurance plan, your premium will increase. This is a thing of common knowledge among policyholders but it often slips the mind when it counts. Another miss could be that you may only have added a small add-on or rider which slipped your mind later. But the plan price increased anyway as the rider was added. The good news is that you can easily avoid this particular blunder and decrease the premium effective immediately. Just go through the coverage benefits and add-ons included in your plan carefully before you proceed to renew it. Make sure it only has things that you need at the moment and nothing additional or unnecessary.

Health Conditions of the Policyholder

Let’s understand this factor with an example. Person A is a perfectly healthy person with little to no breathing complaints. Suddenly they get an asthma attack. Their health insurance plan covers this illness and hence person A did not have to incur any treatment charges at all. But, come renewal time, they notice that the premium amount of their health insurance plan has increased suddenly. This increment was because of the change in the health condition of this policyholder. Every time your health worsens, the premium increases.

Change in Environmental Conditions

The environmental changes around your living area make a huge impact on your health conditions. If you suddenly change your residence from a place with good environmental conditions to a place with worse conditions, your health insurance premium will rise. Since your health insurance company keeps these details updated with them, they will raise the premium according to the potential effects the environment will pose. For example, if you shift your residence nearby a factory that produces a lot of fumes, the premium will increase since you are now at the risk of developing breathing problems.

How Much Do Health Insurance Premiums Increase Each Year?

Be it health insurance or any other kind of general insurance, the premiums of your plans are decided using a risk calculation method. Insurance providers hire specialists who study each case that the providers get for their individual risk factors. This study includes your health condition at the time of buying the plan, your general lifestyle, the environmental conditions around your residence, your workplace, your age, and most importantly, the inflation rate of the healthcare sector. Depending on these factors, you get a final quote on the premium. The same process is applied when you renew a plan. While it may not be carried out every year, the risk analysis is the main thing that decides the increment in the premium amount of the plan. This means it will differ not only from policyholder to policyholder but also for each renewal.

How to Buy the Cheapest Health Insurance in Dubai?

Buying the cheapest health insurance in Dubai can be a tricky task. You will have to manage quite a lot of things when searching for a health insurance plan that fits your budget and also offers quite a comprehensive list of benefits. The ideal way to search for a cheap plan is to compare and buy. Make sure that you scout the joint and choose a plan that seems to be the cheapest. Other things that you can do are make a plan with high deductibles, choose only the most important benefits that you need and take minimal add-ons only.

Some Things the You Would Want to Consider

Q1. Have You Chosen the Right Assured Sum?

Ans. Do not compromise on the assured sum of the plan. Ideally, calculate the coverage that you need and then choose the ideal one that fits the budget as well.

Q2. Are You Ensuring Your Family?

Ans. Try and choose a family health insurance plan if you have dependents. Family health insurance plans are far more convenient and cost-effective if you only need basic coverage.

Q3. Have You Examined the Add-Ons?

Ans. Only take add-ons that are essential for you. Remove the ones that are extra and may not be required for a while.

Q4. Do You Need Any Immediate Changes in the Coverage?

Ans. Keep the coverage steady if you do not need an immediate or important change in the services. Introducing more additions will increase the price of the plan.


Increment in your health insurance premium is completely subjective. It depends on a lot of factors. This means that your health insurance premium doesn't need to increase every year. More importantly, you can control most of these factors easily and prevent your health insurance premium prices from increasing. The most important thing is that you research and compare your options ideally. Comparison is the only thing that will allow you to find the cheapest health insurance in Dubai. Combine it with thorough guidance from financial experts and you can easily find a suitable health insurance plan for you.

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