Health insurance sum insured: Review every 2-3 years to beat inflation

To strike a balance between the need for protection and affordability, combine base policy with super top-up

A growing number of Indians are opting for larger health insurance covers, reflecting a shift towards greater financial preparedness amid rising medical costs. According to data from Policybazaar, demand for higher sum-insured plans has risen sharply after the Goods and Services Tax (GST) exemption: 13 per cent of buyers on their platform purchased policies with a sum insured above ₹25 lakh, 45 per cent chose ₹15–25 lakh coverage, 24 per cent selected ₹10–15 lakh policies, and only 18 per cent opted for covers below ₹10 lakh.

 

Factors to consider 

The ideal sum insured depends on factors such as city, age, family size, medical history, and lifestyle. 

Family structure: “For individuals, ₹15 lakh and above is advisable in metros, and ₹10 lakh in smaller towns. A family floater of ₹25 lakh for four members is ideal, rising to ₹25–50 lakh for metro families or those with senior citizens,” says Niharika Singh, executive director – marketing, IFFCO Tokio General Insurance Company.

 

City: Treatment costs tend to be higher in bigger cities. “In tier-1 cities, residents should opt for coverage of at least ₹10 lakh, while those in tier-2 cities should buy a minimum of ₹7 lakh coverage to ensure adequate protection,” says Siddharth Singhal, business head – health insurance, Policybazaar.com.

 

Pre-existing health conditions: Those with conditions such as diabetes, heart disease, or cancer should consider higher coverage of ₹50 lakh to ₹1 crore. “Choose policies with short waiting periods and no sub-limits or high co-pays to minimise out-of-pocket expenses,” says Singhal.

 

Buy early 

Buying health insurance in the mid-20s means a low premium, easier approval, and a wider range of policies to choose from. “It also helps complete the waiting period early, ensuring conditions like diabetes or heart issues that may arise later are covered without delays,” says Singhal.

 

Balance security and affordability 

While a very high sum insured may be affordable in the 30s and 40s, the premium could become unaffordable in the 60s and beyond, when one needs health insurance most. Combining a base plan with a super top-up can expand total protection at a reasonable cost—for example, a ₹20 lakh base policy with a ₹80 lakh super top-up would cost a fraction of the premium one would incur on a ₹1 crore plan.

 

High base policy vs base + super top-up 

A high-sum-insured base policy offers benefits like seamless coverage with no deductible, smoother claims, easier renewals, and minimal out-of-pocket costs.

 

Combining a moderate base policy with a super top-up can provide high coverage at a lower cost. “Super top-ups are more affordable and, when paired with a smaller base plan, can provide higher total coverage than a high-sum-insured policy,” says Adhil Shetty, chief executive officer, BankBazaar.com.

 

“The deductible—the amount that you or your base policy pays before the super top-up pays—is key. Matching the deductible to your base policy’s sum insured ensures smooth activation,” says Bhaskar Nerurkar, head – health administration team, Bajaj General Insurance.

 

Opt for a super top-up rather than a top-up. “A top-up applies the deductible per claim, while a super top-up accumulates expenses over a year before it activates,” says Nerurkar.

 

High-value plans cover maternity, baby care, OPD, day-care procedures, post-treatment care, and organ donation, often without room-rent sub-limits. Similar benefits can be added to smaller base plans through riders and add-ons.

 

A base-plus-super-top-up combo has a downside. “Claims may need to be filed separately for the base plan and the super top-up,” says Shetty. Buy both from the same insurer to ensure smoother reimbursement.

 

Tackling medical inflation 

Medical inflation in India is around 12–14 per cent annually, which can double treatment costs in five to six years. Coverage should be reviewed every two to three years or after major life events such as marriage and childbirth.

 

Nerurkar adds that insurers often allow upgrades in sum insured at renewal without medical checks for policyholders with a good claims history.

 

Mistakes to avoid 

Common errors include underestimating treatment costs, delaying the purchase of insurance until later in life when one has already contracted a few ailments, and depending solely on employer-provided cover. “Buy early and review the sum insured regularly. Combining individual or family policies with corporate cover, along with top-ups and wellness programmes, can help maintain strong health protection throughout life,” says Nerurkar.

 

Coverage must evolve with age

 

• 20s: Opt for  ₹10 lakh cover to handle mild ailments, accidents, occasional emergencies
• 30s: Choose a  ₹  20 lakh family floater; ensure coverage for maternity and newborn-related complications
• 40s: Supplement ₹20 lakh base with ₹80 lakh super top-up; add critical illness cover; buy a separate plan for parents
• 50s: Higher health risks, must have ₹50 lakh–1 crore total coverage

 

Source: Policybazaar