Financial Health Matters: Zurich Kotak General Insurance Insights on Credit Scores & Premiums
Cracking the code: Does credit score affect health insurance?
A credit score is a three-digit score calculated based on your financial health. It determines how financially stable you are and whether you pay your bills on time or not. Financial institutions use this score to evaluate your capacity to repay your loans or make any payments on time. It reflects your credit history and credit utilisation. To know about the credit score impact on health insurance premiums, let us first understand the importance of a good credit score. Then you can check all the Zurich Kotak General Insurance plans to choose the one which that best suits your needs.
Importance of a good credit score
A good credit score has many advantages and gives you many benefits. A score of 750 and above is considered a good credit score and reflects your payment history, credit type, credit exposure and credit duration. It improves your ability to secure credit. Here is why it is important.
Credit approval
A good credit score improves your chances of getting credit approval because lenders see you as a responsible borrower with good credit behaviour. It becomes easier to get a loan or a credit card.
Bargaining power
A good credit score also gives you the bargaining power to get credit at lower interest rates and better terms and conditions which can include lower processing costs, flexible terms of repayment and lower interest rates.
Reduced health insurance costs
When you apply for health insurance, your financial profile is also evaluated to determine the premium of your health insurance and financial health. A good credit score indicates lower financial risk.
Health insurance premiums and credit score
Credit information are used to calculate your insurance premium rates. An applicant with a low credit score will have to pay higher premiums to get health insurance coverage. The following points describe credit score impact on health insurance premiums.
- A good credit score can get you discounts on premiums. The better the credit score, the higher the discount. This way people with good credit scores are rewarded. It encourages good financial behaviour.
- IRDAI recently proposed to link insurance frauds to credit scores which means if you are a part of an insurance fraud, it will be reflected on your credit profile. When an insurance fraud happens, the insurer loses revenue and the policyholder bears the cost of it in the form of increased premiums. As per the proposal, if an individual is guilty of insurance fraud, it will affect his credit scores and fraudsters can be easily identified. Thus, it will help insurers avoid unnecessary premium hikes and protect customers’ money from fraud.
Conclusion
To conclude, it is important to regularly monitor your credit report and if there are issues take steps to improve your credit score. Not only do credit scores affect your insurance premiums but paying premiums on time and having continuous health insurance coverage for a long duration also improves your credit rating.
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