What Health Insurance Coverage is Adequate in India?

With each passing day, inflation continues to impact all areas of life, and healthcare costs are no exception. In fact, medical expenses are rising at a much faster rate than general inflation. Given these escalating costs, an important question arises: how much health insurance coverage is truly adequate for you and your family?

Health insurance has become a necessity, but is a ₹5 lakh cover sufficient, or should you consider opting for ₹10 lakh?

Most Indians currently hold policies with a ₹5 lakh sum insured, but as healthcare inflation rises—now at 14%, according to a study by ACKO—this debate has gained urgency. Recent data from ACKO General Insurance sheds light on India’s growing healthcare expenses, making a compelling case to reconsider the adequacy of traditional coverage limits.

Healthcare Inflation and Rising Hospitalization Costs

According to ACKO's study, the hospitalization costs in India surged by 12.8% during the 2023-2024 and the average claim size rose to ₹70,558 from ₹62,548, highlighting the impact of healthcare inflation. Moreover, gender-specific data showed that while the average claim size for women was ₹69,553, for men, it was significantly higher at ₹77,543.

This inflationary trend extends beyond basic medical care. The common procedures like angioplasty, which cost between ₹1-1.5 lakh in 2018. It is inflated now and costing anywhere between ₹2 to ₹3 lakh. You won't be surprised if it could rise to ₹6-7 lakh by 2030. Kidney transplants, which once cost ₹5-8 lakh, now require ₹10-15 lakh, and are expected to reach ₹20 lakh in the coming years. Such escalating costs make clear that you need fat health insurance coverage to handle serious medical emergencies.

Why a ₹5 Lakh Cover May Fall Short

The ₹5 lakh coverage, once considered a reasonable safety net, is becoming increasingly inadequate due to several factors:

• Rising Costs of Common Procedures: As seen in the ACKO study, the cost of critical treatments like angioplasty and kidney transplants has doubled or tripled over the past few years. A ₹5 lakh cover would barely scratch the surface in case of such procedures.
• Multiple Family Members Covered: Many of you opt for family floater policies, where multiple family members are covered under a single plan. The ₹5 lakh sum gets divided among several individuals, drastically reducing the available amount for each.
• Post-COVID Realizations: The pandemic served as a stark reminder each of us that medical emergencies can escalate quickly. You with ₹5 lakh coverage found yourself struggling to manage hospitalization bills, especially when your multiple family members needed treatment simultaneously.

Is ₹10 Lakh the New Benchmark?

Given the healthcare inflation and rising treatment costs, experts now recommend a minimum health insurance cover of ₹10 lakh. ACKO's analysis aligns with this, making a ₹5 lakh cover seem inadequate.

Here’s why a ₹10 lakh health cover is more suitable in today’s context:

• Covers Advanced Treatments: As medical procedures grow more expensive, a ₹10 lakh health insurance cover offers a stronger safety net for your pocket. Without at least this amount of coverage, many advanced treatments could end up becoming your out-of-pocket expenses.
• City-Specific Healthcare Costs: Cities like Mumbai and Delhi have significantly higher hospitalization costs compared to smaller towns. However, living in a smaller town doesn’t necessarily mean lower medical expenses. Often, advanced treatments may not be available locally, requiring travel to the nearest metro or capital city for care. This makes having higher health insurance coverage a necessity, not a choice. In today's landscape, a ₹10 lakh cover appears to be the bare minimum.
• Rising Risk of Chronic Illnesses:
  The same study reveals that individuals in the 41-50 age group face a higher risk for serious ailments like cancer and heart disease. If you fall into this category, it’s crucial to have adequate health insurance coverage, especially with cancer treatment costs rising and heart conditions becoming more common. If your current coverage seems insufficient, now is a good time to review it. If you're unsure where to start, our team offers free policy reviews to help you ensure you’re fully protected.

Tailoring Health Insurance to Your Needs

While ₹10 lakh is emerging as the new minimum recommendation, it’s also essential to tailor your health insurance coverage based on your personal health needs:

• Room Rent Caps and Preferences: If you prefer private rooms in hospitals or want access to high-end facilities, a ₹5 lakh cover with room rent limits may not suffice. A ₹10 lakh plan without such caps can provide you with better flexibility in choosing your healthcare.
• Chronic Illnesses and Family History: For those with a family history of chronic conditions like cancer or heart disease, a higher sum assured ensures long-term security. A ₹10 lakh policy gives more breathing room for multiple or recurring treatments.
• Separate Cover for Senior Citizens: If you have elderly parents, it's advisable to opt for separate senior citizen policies rather than including them in a family floater plan. Older adults typically require more frequent medical care, and their higher claim rates could exhaust a shared cover quickly.

If you're a first-time health insurance buyer and unsure how to customize your policy, our team is here to assist you.

The Verdict: Opt for ₹10 Lakh, but Review Regularly

A ₹10 lakh cover offers a more robust safety net against India’s rising healthcare costs and inflation, as reflected in the data from ACKO. However, healthcare needs are ever-evolving. It’s essential to review your coverage time to time to account for lifestyle changes, health conditions, and further inflation in medical expenses.

In summary, while a ₹5 lakh cover was once deemed sufficient, the rising cost of healthcare in India demands a rethink. For individuals and families looking to protect themselves adequately, a ₹10 lakh cover is now the recommended minimum to ensure that medical emergencies don’t turn into financial catastrophes.

What do you think is the right amount of health insurance coverage for healthcare needs in India? Share your thoughts in the comments below!