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How India’s health insurance preferences have changed over the last three years

From higher sum insured to nil waiting periods to OPD expenses, policyholders are looking beyond just hospitalisation benefits, and insurance companies are coming up with policies catering to their preferences.

December 25, 2023 / 07:48 AM IST
Health insurance

India's health insurance preferences have evolved over the years

The last three years have changed the world far more than several decades could, especially the healthcare landscape. It was just one virus that wreaked havoc and millions of people across the world landed up in hospitals.

People ended up losing their lifetime savings to afford the treatment for COVID-19 while many others could not even afford it. That was the tipping point. It was the moment of collective realisation that how important health insurance is in vulnerable circumstances like these.

In the last three years since that moment, there has been a remarkable transformation in the way people perceive health insurance – in India as well as on a global scale. Before the pandemic, health insurance was more of an afterthought at best, especially when it came to middle-class and lower-income households.

However, that has completely changed now and people understand that it is a necessity. It is not just the awareness about having a health insurance plan, people’s preferences have evolved, and insurance companies are trying to keep up. This has also led to many improvements in what health insurance policies offer today compared to a few years back. Let’s take a look at what policyholders seek in health plans and what is on offer.

Also read: Insurance companies are pushing Rs 1-crore health covers. Do you really need them?

Sum Insured

The biggest change that has been witnessed in policyholders’ preference is about having enough coverage. With the rising costs of healthcare, the choice of the sum insured now leans towards the higher side. Our data suggests that a few years back a health insurance plan with up to Rs 5 lakh sum insured was a popular choice for most individuals and families.

However, post-pandemic, it's not surprising that health insurance plans with higher coverage limits, such as Rs 10 lakh sum insured, have become more popular. Similarly, Rs 1 crore sum insured is the most preferred family floater plan now.

Another important change is that policyholders now look beyond just the basic coverage for hospitalisation. More people now understand that financial protection is imperative not only in case of medical emergencies but also for routine medical expenses, preventive care and critical illnesses.

Waiting period and sub-limits

A major pain point for policyholders was the long waiting period traditional health insurance policies had when it came to pre-existing illnesses. In several policies, the waiting period was as high as four years. That meant that even after opting for a health insurance plan, you were not covered for a long period of time for any pre-existing ailments.

This was especially problematic for those who suffered from diabetes, hypertension, thyroid issues, etc. The good news is that modern health plans now offer the option to start coverage for pre-existing diseases right from day one. And such plans are now the preferred ones.

Also read: Suffering from diabetes or hypertension? Inform insurer before buying health insurance cover

Another change has been in sub-limits under the health plans which were quite common a few years back. So, despite having high coverage, policyholders would often find that they had to pay a substantial amount from their pockets because of sub-limits imposed on room rent, ICU charges, specific illnesses like cataract surgery, modern treatments and alternative treatments. Over the years, there has been a shift towards more transparent and comprehensive health insurance plans with no sub-limits. So one can utilise the entire sum insured on different components of treatment without any sub-limit.

Also read: Moneycontrol-SecureNow Health Insurance Ratings: Your guide to picking the right policy 

Restoration and Cumulative Bonus Benefits

Earlier, most policies would offer a No Claim Bonus of up to 10 percent for every claim-free year and reduced at the same rate after making a claim during the policy period. However, now there are many plans in the market that help policyholders increase their sum insured by up to 10 times if they make no claims. In fact, there are also plans that do not revoke the no-claim benefits even in case a claim is made.

The restoration benefit has also transformed in recent years. Earlier, this feature allowed policyholders to restore their maximum coverage limit once during the policy term if it gets exhausted due to claims. However, there were some strict conditions involved like the restoration benefit was not applicable for the same illness or the same person within the same policy year. The new-age insurance policies, though, allow for the restoration of the maximum coverage, up to the sum insured, an indefinite number of times after the initial sum insured is exhausted. Moreover, they also allow for the restoration of the coverage limit for the same medical condition, if it recurs within the same policy year after the initial sum insured is exhausted.

Other Benefits

Apart from the transformation in preferences as well as options in health insurance plans, there are also certain changes when it comes to certain specific instances. For example, in the past, comprehensive global coverage was relatively rare in health insurance plans. However, many insurance companies now offer global health insurance for individuals and families.

Also, until a few years ago, health insurance plans often did not provide coverage for mental illness or outpatient department (OPD) expenses to the extent that they do today. These changes reflect an increasing recognition of the importance of mental health and the evolving needs of policyholders.

Even when it came to maternity benefits, there were very limited options. On the contrary, there are many options today with many insurers even providing coverage for the newborn baby.

To sum up, the post-pandemic years have seen both policyholders and policies evolve and mature to suit modern-day needs. And this journey has just begun.

Siddharth Singhal is Business Head, Health Insurance at
first published: Dec 25, 2023 07:30 am

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