A recent survey conducted by Apollo Munich health insurance shows that 51% of health insurance policyholders in India are underinsured. Underinsured means that policyholders have purchased low sum insured health insurance policies that would not suffice in medical emergencies.
The study was conducted among 7 lakh health insurance policyholders spread across 82 cities in India, and has found that both men and women across metros, tier 1 and 2 cities and towns are underinsured. 52% of men are underinsured compared to women at 46%.
“Although the number of health insurance policyholders in India is increasing annually, people most often choose the lowest sum insured policy, without comprehending the entire process of choosing an appropriate cover. Some of the reasons are lack of awareness about how to pick the right sum insured, overdependence on corporate health insurance coverage, willingness to pay a premium that is only up to the highest limit of rebate under Section 80D of the Income Tax Act,” shows the report.
The survey finds that underinsurance is more prevalent in the higher age brackets as 62% of policyholders above 45 years of age are underinsured. Interestingly, young people seem to be choosing the right sum insured comparatively, only 38% people between 18-35 years are the least underinsured segment amongst all other age groups.
The underinsurance percentage of people between 61-65 years is 75%. One of the main reasons for this alarming underinsurance statistic is that policyholders do not upgrade their sum insured on the basis of their increasing age, changing needs and medical inflation.
The research also shows that south India has the highest percentage of underinsured people - 59% of policyholders, while the underinsurance percentage in the North and West is 49%, East and Central parts of the country is 48% and 45% respectively.
In a press release, Antony Jacob, CEO, Apollo Munich Health Insurance, said, “On the one hand India faces a challenge of lack of health insurance penetration, on the other hand those who have health insurance are underinsured. Underinsurance is a sombre problem as it not only results in increased stress and sudden out of pocket expenditure for policyholders during times of medical exigencies, but also gives them a false sense of assurance of being covered. People must understand that health insurance is not just a tax saving tool, and therefore be mindful while choosing a sum insured for themselves and their family.”
The study also reveals:
- People in their 20s should ideally have a sum insured cover of Rs.5 lakhs if residing in a metro, Tier 1 or 2 cities.
- People in the 30s and 40s should have at least a cover of Rs.7 lakhs while residing in a metro or Tier 1 city. Those residing in Tier 2 cities should have a cover of Rs.6 lakhs.
- Those nearing retirement age (that is are in their 50s) should seek policies with Rs.9 lakhs, if he or she is residing in a metro or Tier 1 city. In Tier 2 cities a sum insured policy of Rs.8 lakhs should be sufficient.
- Indians above the age of 60 years should own health insurance coverage of at least Rs.10 lakhs sum insured to be able to manage their healthcare costs.