Health Insurance

How it works

Health insurance is a contract where you pay an annual premium and the insurer covers eligible hospitalisation and medical costs up to a chosen sum insured. Treatment can be cashless at network hospitals (the insurer settles the bill directly) or reimbursed later. Policies typically cover room rent, surgery, ICU, pre- and post-hospitalisation expenses and day-care procedures, subject to terms.

Why it matters

A single serious illness or accident can wipe out years of savings. Health insurance is the first line of financial defence for every Indian household — medical inflation runs high, and out-of-pocket healthcare spending in India is among the world's largest. A good policy protects your investments from being liquidated for a hospital bill and ensures access to quality care without delay.

In India

Indians buy individual policies, family floaters (one sum insured shared across the family), and super top-ups (cheap extra cover above a threshold). Employer group cover is useful but often inadequate and ends when you leave the job, so a personal policy is essential. The IRDAI regulates insurers, and premiums for health insurance qualify for deduction under Section 80C/80D of the old tax regime (with a higher limit for senior-citizen parents).

Common mistakes

The biggest errors: buying too low a sum insured (₹3–5 lakh is increasingly inadequate in metros, where a single major surgery can cost much more — many advisers suggest a higher base cover plus a cheap super top-up), and not reading the fine print on waiting periods, room-rent caps, co-pay, sub-limits and disease-wise exclusions for pre-existing conditions. Relying solely on employer group cover is risky because it ends the day you leave or lose the job, often when you most need it, so a personal policy you own and renew lifelong is essential. Buying late in life means higher premiums and longer waiting periods, so start young while you are healthy. Above all, disclose your medical history honestly — non-disclosure is the single leading reason genuine claims get rejected, and the saving on a lower premium is worthless if the claim is later denied.