₹1 crore-plus health covers offer safety, but affordability remains key

Health insurance premiums tend to rise rapidly at older age

The share of health insurance policies sold on its portal with a cover of Rs 1 crore and above has risen from 2 per cent to nearly 12 per cent since the central government rationalised the Goods and Services Tax (GST) on health insurance from 18 per cent to zero, according to data from Policybazaar. The shift reflects a change in buyer preferences.

 

Why demand has risen

 

A serious illness in the family often prompts households to reassess their health insurance cover. “People see a family member face a serious illness and realise that smaller covers do not suffice any more,” says Saurabh Vijayvergia, founder and chief executive officer (CEO), Coversure.

 

High healthcare inflation has also strengthened the case for larger policies. In India, it runs at around 14 per cent annually, which means treatment costs tend to double every five to six years. Kapil Mehta, co-founder, SecureNow, emphasises the need to buy health insurance with an eye on future needs.

 

The cost of treating critical illnesses has risen sharply. “Treating an illness like cancer can easily cost around Rs 30 lakh to Rs 70 lakh today in a metro city,” says Mehta.

 

New medical technologies are likely to make treatments more expensive.

 

The removal of goods and services tax (GST) on individual health insurance premiums from September 2025 has reduced the cost of buying large covers. “Customers who could earlier afford Rs 50 lakh coverage may now be able to buy Rs 1 crore coverage for around the same premium outgo,” says Siddharth Singhal, business head, health insurance, Policybazaar.com. 

 

Assess your need

 

Buyers should assess need before they commit to the higher premium required to maintain a Rs 1 crore cover.

 

Family medical history should be the first criterion. “If a serious illness runs in the family, a large cover becomes a necessity rather than a luxury,” says Vijayvergia.

 

The city of residence and likely place of treatment also matter. Costs in private hospitals in metros such as Mumbai, Delhi, and Bengaluru are in a different league compared to hospitals in smaller towns.

 

Buyers should ask whether they can fund the worst possible medical event without liquidating long-term savings or borrowing. “If the worst possible medical event in the family would not be covered without destroying your savings or forcing you to borrow, you are probably underinsured,” says Vijayvergia.

 

Affordability risk

 

A large cover offers comfort, but affording it over the long term can pose a challenge.

 

“The main risk of buying a Rs 1 crore sum insured policy as a single base product is affordability over time. Such covers become very expensive at the later stages of life. Maintaining them, especially once income drops after retirement, becomes difficult,” says Shilpa Arora, co-founder and chief operating officer (COO), Insurance Samadhan.

 

Premium increases tend to be steep for older policyholders. “They can range from 20 per cent to as high as 100 per cent after age 55 or 60,” says Arora.

 

Run policy checks

 

A high-value policy should provide meaningful protection across illnesses and treatment types. Buyers should examine the policy’s features beyond the headline cover amount.

 

The policy should not come with sub-limits for specific treatments. “Cover should be available for the full value of Rs 1 crore for all medical issues,” says Mehta. Buyers should also examine the policy’s no-claim bonus (NCB) norms.

 

High-value policies should not carry room rent caps or sub-limits for modern treatments such as robotic surgery, immunotherapy, or oral therapy.

 

“Check the exclusions and waiting periods of the policy carefully,” says Arora.

 

Consider super top-up

 

Buyers who cannot afford a high-value base policy can combine a base policy with a super top-up. They could buy a base policy of Rs 20 lakh and add a high-value super top-up of Rs 1 crore.

 

This structure reduces premium outgo, but there are trade-offs. A single large base policy offers a simpler claim experience. “A large base cover means one policy, one insurer, and a single claim process from the first rupee of the hospital bill to the last,” says Vijayvergia.

 

A base policy and super top-up combination can make claims more complex because two policies may come into play.

 

A large base policy also offers wider benefits. “A large policy comes with maternity cover, outpatient department cover, and some form of global coverage,” says Singhal.

 

The base-plus-super-top-up route can still help buyers build a larger cover at a lower cost. “It could be 15–25 per cent more economical,” says Vijayvergia.

 

Arora says the deductible of the super top-up should match the sum insured of the base policy. Buying the super top-up from the same insurer from which the base policy was purchased can streamline claims and reduce friction.

 

Scale up early

 

Buyers who cannot afford a high-value policy can start with a smaller policy and scale it up gradually. This approach requires discipline and timely action.

 

One point to bear in mind is that any sum insured that you buy comes with a waiting period of two–three years, which is why scaling up early is important.

 

Buyers with higher health risks should not delay the purchase of a large cover. “A smoker, an overweight person, one with a sedentary lifestyle, or someone managing hypertension or pre-diabetes would be better off going for a larger policy right away,” says Vijayvergia.

 

Buying a large cover early also makes sense if there is a family history of cancer, cardiac disease, or diabetes. A person in the early 30s with no family history, no existing health conditions, an active lifestyle, and residence in a smaller city may start with a smaller cover.

 

“The risk in this approach is that if the person develops a critical illness, increasing the base sum insured later may become difficult,” says Singhal.

 

If a health event occurs before the upgrade, the health insurance options that are available may become more limited and more expensive.

 

Those who buy a lower-value policy should consider a cumulative bonus rider. “With this rider, the sum insured increases every year by 100 per cent of the base sum insured if the policyholder does not make a claim,” says Singhal.