Mental health insurance in India seems fine, until you read the fine print

Treatment is supported in extreme cases; insurance system 'designed to fail': Expert

India will have 60-70 million people living with mental illness over the years — a number comparable to France’s population, said Ashish Singhal, group chief executive officer of PeepalCo, a canopy housing a collection of brands serving India with tailored wealth-tech products.

 

Online searches for mental health insurance increased 41 per cent last year as reported by Policybazaar.com but actual coverage leaves much to be desired. Singhal outlined typical insurance terms for mental health:

 

Mental illness coverage is now mandatory for all insurers

 

Every health insurance policy “includes” mental health

 

However, he says the ground reality is different: Coverage only if a person is hospitalised

 

In Singhal’s words, “the system is designed to fail.” Unlike physical health issues, where hospitalisation, medicines, and consultations are all covered, mental health treatment is only supported in extreme cases.

 

According to him:

 

• Outpatient therapy sessions are mostly not covered 
• Psychiatrist consultations receive minimal support 
• Medication is partially covered, but often comes with complex terms

 

Most policies require the patient to be hospitalised before any meaningful coverage kicks in, a condition that doesn’t reflect mental health care in real life.

 

Singhal says that less than 1 per cent of all health insurance claims in India are for mental health treatment. “Someone needs to work on preventive-first insurance claims rather than emergency-first ones.”

 

A call for real change

 

While states like Karnataka are showing the highest interest in mental health insurance (based on Google search trends), Singhal believes this is a beginning.

   

His message is clear: if we truly want to make mental health a priority, the insurance ecosystem needs to catch up, not just with intent, but with real, accessible coverage.