India’s health insurance market is projected to more than double from USD 145 billion in 2024 to USD 308 billion by 2033, driven by a steady annual growth rate of 8.70%. The growth in the health insurance industry was especially seen after the COVID pandemic. The pandemic highlighted the rising costs of healthcare facilities and the gaps in access to quality healthcare for the average person. Check out this blog to explore the meaning and need for health insurance and related factors in buying a good health insurance plan for yourself and your family.
Health insurance is a type of financial protection that helps you pay for medical expenses when you are sick, injured, or need healthcare services like hospital stays, surgeries, or doctor visits. Health insurance is provided by both the government and private companies in India. The insured person has to pay a premium at regular intervals to get an insurance cover that can cover part or all of the medical costs, depending on the policy. Some plans cover only hospitalisation, while others include medicines, check-ups, and day-care procedures. The industry has grown rapidly in India due to rising healthcare costs and increased awareness. Government schemes like Ayushman Bharat support low-income families, while private insurers offer various plans for individuals, families, and senior citizens. Health insurance is becoming essential in India as it provides financial protection and access to better healthcare.
Health insurance is not just a financial product but rather a safety net that protects individuals and families from the ever-increasing medical costs in the country. The importance of having a good health insurance plan is highlighted below.
Medical treatment in India is becoming more expensive every year. A simple hospital visit or surgery can cost thousands or even lakhs of rupees. Without insurance, paying for these costs out of pocket can be very difficult for an average citizen, which can lead to aggravating the medical condition due to a lack of timely attention. Health insurance helps by covering these expenses, so the person does not have to tap into their savings or borrow money during a medical emergency.
Health problems are like the uninvited guests who may tend to overstay. Accidents, sudden illnesses, or serious conditions like heart attacks or cancer can happen at any time without warning and can trigger a financial meltdown if not managed properly. Health insurance provides financial protection by covering most of the treatment costs, thus helping the family stay stable during tough times without worrying about money.
Many people in India delay or avoid treatment due to the higher cost of treatment or access to better healthcare facilities. Health insurance enables people to get treated at good hospitals without worrying about the bill. Insurance companies also have a list of partner hospitals, called network hospitals, where treatment can be done without paying upfront, also known as cashless treatment.
Some diseases, like cancer, kidney failure, or heart disease, require long-term treatment, which can be very expensive. Special health insurance plans can help cover the high costs of such serious conditions, reducing the financial pressure on the family.
Insurers provide family health insurance plans where one policy covers all members, including husband, wife, children, and sometimes parents. This makes it easier to manage health needs for the entire family under one plan and gives peace of mind, protecting every member of the family in the face of any medical emergencies.
Many health insurance policies include free annual check-ups. This helps people catch health problems early and take timely action before they become serious. Regular health check-ups also promote a healthier lifestyle and early diagnosis.
The Indian government has been supporting and promoting the need for health insurance in many ways. Schemes like Ayushman Bharat offer free or low-cost insurance to poor families, allowing easy access for their medical needs. Also, under Section 80D of the Income Tax Act, taxpayers can get tax benefits on the premium they pay for health insurance under various categories.
There are many types of health insurance plans available through private and government insurers in India. Some of the primary types of health insurance plans include,
An individual health insurance plan covers only one person. The policyholder pays a yearly amount called a premium, and in return, the insurance company agrees to pay medical expenses up to a fixed limit (called the sum insured). This includes hospital bills, surgeries, doctor visits, tests, and medicines. The entire sum insured is used only for that one person. It is a good choice for single individuals or those who want to keep their coverage separate from their family members.
A family floater plan covers the entire family under one single policy. It usually includes the husband, wife, children and sometimes parents too. Instead of taking separate policies for each person, the family shares one common sum insured. For example, if the policy has a Rs. 5,00,000 limit, any family member can use that amount for treatment. This is usually cheaper than buying individual policies and works well for young and healthy families.
This type of health insurance is specially made for people who are 60 years old or above. As people get older, they are more likely to face health problems and may need frequent medical attention. Senior citizen plans cover age-related diseases like arthritis, heart conditions, and diabetes. These plans may also include regular check-ups and long-term treatment support. Although the premiums are higher due to age, these plans are very helpful for older adults to manage their healthcare costs.
A critical illness plan gives a lump sum of money if the person is diagnosed with a serious illness like cancer, heart attack, kidney failure, or stroke. These illnesses can be life-threatening and usually need long and expensive treatment. The lump sum amount helps not only with medical costs but also with other needs like travel, recovery, or even loss of income. This type of insurance is often bought as an extra policy along with regular health insurance.
Top-up and super top-up plans are used to increase your health coverage without paying a high premium. These plans come into use only when your hospital bill crosses a certain amount, known as a deductible. For example, if you have a deductible of Rs. 3,00,000, and your bill is Rs. 5,00,000, the top-up plan will cover the Rs. 2,00,000 extra. Top-up plans cover one large bill, while super top-up plans cover multiple bills that together cross the deductible. These are useful when your basic plan is not enough, especially during major illnesses or surgeries.
This type of insurance provides financial support if a person meets with an accident. It covers expenses for injuries, disability, and even death caused by accidents. For example, if someone gets injured in a road accident and needs surgery or long-term care, this plan will help pay for those costs. It also gives a fixed amount of money to the family if the insured person dies or becomes permanently disabled. This is especially useful for people who travel a lot or work in risky environments like construction or factories.
Group health insurance is given by companies to their employees. The company buys one large policy that covers all employees together. It usually includes basic coverage like hospital stays and treatments. Some group plans also cover the employee’s family. These policies are either free or offered at a low cost as part of the employee benefits. However, the coverage may stop when the person leaves the job, and it may not be enough if a major health problem happens. So, many people buy an individual policy in addition to this.
Maternity health insurance covers the costs of pregnancy and childbirth. It includes hospital charges for delivery (normal or C-section), doctor consultations, tests during pregnancy, and post-delivery care. Some plans also cover the newborn baby’s medical expenses for a few months. Maternity coverage is often available as an add-on to regular health insurance. It usually comes with a waiting period of 1 to 2 years, so it is better to buy this plan early if someone is planning to start a family.
Buying a health insurance plan is a vital decision that has to be made after careful consideration of various needs and factors influencing this decision. Some of such factors to be considered are explained below.
Sum Insured (Coverage Amount) - The sum insured is the maximum amount the insurance company will pay for medical expenses in a year. It is important for a person to choose a coverage amount that is enough to handle high treatment costs, especially in metro cities. Families should consider a higher sum insured to cover the medical needs of all members.
Type of Plan - One should select the right type of health insurance plan, whether it is an individual policy, a family floater plan, or a senior citizen policy. An individual plan is suitable for single persons, a family floater works well for young families, and a senior citizen plan is designed for older adults with age-related health concerns.
Pre-Existing Disease Waiting Period - Many policies do not immediately cover pre-existing illnesses such as diabetes or high blood pressure. They have a waiting period, usually between 2 to 4 years. It is wise for the buyer to choose a plan with a shorter waiting period if such conditions already exist.
Cashless Hospital Network - Before buying a policy, the person should check if the insurance company has a strong network of cashless hospitals nearby. A wide network allows for easier access to treatment without paying upfront, especially during emergencies.
Claim Settlement Ratio - This ratio shows how many claims an insurance company successfully pays. A high claim settlement ratio (above 90%) means the company is more dependable. It helps the buyer trust that their claim will be approved without much hassle.
Co-Payment Clause - Some health insurance plans require the insured person to pay a portion of the treatment cost (such as 10% or 20%). This is called a co-payment. While such plans may have lower premiums, they increase the person's financial burden during treatment. If possible, one should choose a policy without this clause.
Add-On Benefits - Some plans offer extra features like maternity cover, ambulance charges, free health check-ups, or critical illness coverage. These add-ons make the policy more useful and should match the individual’s or family’s specific health needs.
Room Rent Limit - Some policies limit the type of hospital room a person can choose. If the policy only allows a shared or general room, but the patient wants a private room, they may need to pay extra. It is important to choose a plan that provides flexibility in room selection.
Day-Care Procedure Coverage - Modern treatments like cataract surgery, dialysis, or chemotherapy are done in a few hours and do not need hospital stays. A good policy should cover these day-care procedures, which are often costly despite being short.
The Ayushman Bharat Scheme, also known as Pradhan Mantri Jan Arogya Yojana (PM-JAY), is a health insurance scheme launched by the Government of India to help poor and low-income families get free medical treatment. The aim of the scheme is to reduce the burden of high hospital expenses for people who cannot afford private healthcare. Under this scheme, eligible families get free treatment of up to Rs. 5,00,000 per year per family in government and selected private hospitals across India.
Many families in India, especially in rural and economically weaker sections, cannot afford hospital bills and often avoid treatment due to high costs. The Ayushman Bharat scheme was created to solve this problem by giving them free access to quality healthcare. It is especially helpful in cases of serious illness, surgery, or emergency hospitalisation.
The scheme is mainly for families listed in the Socio-Economic Caste Census (SECC) 2011 database. People do not need to pay any premium to get this benefit. To check eligibility, one can visit the official Ayushman Bharat website or go to a nearby government hospital or a Common Service Centre (CSC). No special documents are needed other than an Aadhaar card, a ration card, or a voter ID for verification.
Unlike private health insurance plans, Ayushman Bharat is completely free for eligible families, and there is no premium or payment needed.
While private insurance offers more personalised services and higher coverage, Ayushman Bharat is more focused on providing basic and necessary treatment to the poor.
It covers a wide range of treatments, including surgeries, maternity care, and critical illnesses.
The scheme works like a cashless plan, meaning the beneficiary does not have to pay anything at the hospital if they are covered under the scheme.
Health insurance is an important way to protect oneself and the family from high medical costs. It assures the insured person and their family of timely help without drastically affecting their pockets and thus allows peace of mind in the process. The need and importance of health insurance are reflected by the growing size of the industry and the diverse products now offered under government schemes, as well as by private players to cater to the vast population of India.
This article talks about the basics of health insurance and its growing need in the world we live in today. We hope this article was able to address your concerns relating to health insurance and help you choose the right plan. Let us know your thoughts on the topic or if you need further information on the same.
Till then, Happy Reading!
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Marisha Bhatt is a financial content writer @TrueData.
She writes with the sole aim of simplifying complex financial concepts and jargon while attempting to clarify technical and fundamental analysis concepts of the stock markets. The ultimate goal is to spread vital knowledge and benefit the maximum audience. Her Chartered Accountant background acts as the knowledge base to help clarify crucial concepts and create a sound investment portfolio.
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