In India’s fast-changing healthcare landscape, medical costs are rising faster than income, inflation, and expectations. While advanced treatments are improving, they also bring growing financial pressure on individuals and families unprepared for emergencies.
Most Indian households today are well aware of health risks from lifestyle diseases, the environment, and longer lifespans. Yet, financial preparedness, especially via health insurance, lags.
We still treat insurance premiums as a commodity cost. We search for the lowest number, equating affordability with adequacy. In reality, the cheapest policy may be the most expensive mistake. Cracking the premium code in 2025 demands a rethink of what health insurance means, what it should deliver, and how we must align it with the new economics of care.
Old playbook won’t work
Let’s look at the numbers. Over the past decade, the cost of hospitalisation, advanced procedures, and even routine diagnostics has climbed dramatically. Heart surgeries, cancer treatments, and critical care interventions now routinely cross the Rs.30-40 lakh mark. Cataract surgery, once considered minor, can now cost over 1 lakh in a top hospital.
These are indicators of a structural shift in healthcare pricing, driven by better medical technology, global standards of care, and increasing demand. At the same time, medical inflation in India has consistently hovered at 13-14% annually—double the pace of general inflation and far beyond the wage growth for most Indians. Some years, it has surged as high as 20%. This is not a spike; it’s a trend.
Over the past decade, the cost of major medical procedures has surged. A kidney transplant that cost around Rs.5 lakh in 2013 now exceeds Rs.18 lakh. A heart transplant, in some cases, can cost up to Rs.34 lakh. In this context, insurance covers of Rs.3-5 lakh are no longer adequate; they reflect an outdated cost structure. If we continue to treat premiums as just another line item in our budgets, rather than a bulwark against financial distress, we will continue to be caught unprepared.
Rising cost of critical care over the years
Therefore, a Rs.1 crore health cover isn’t a luxury; it’s the new normal. It reflects the real cost of care today and anticipates the increasing complexity of medical interventions tomorrow. It is not just about critical illness. It’s about diagnostics, consultations, follow-ups, mental health services, pre- and post-hospitalisation costs, and the growing expectation of quality care across every touchpoint. The comprehensive nature of healthcare today demands comprehensive financial coverage— and a rebalancing of what consumers consider ‘adequate.’
The good news is that increasing your health cover from Rs.10 lakh to Rs.1 crore doesn’t mean your premium will go up 10 times. For a young couple in their mid-30s, a Rs.1 crore plan can cost around Rs.2,000 to Rs.2,500 per month— only about 10-15% more than a Rs.10 lakh policy, but with much stronger protection.
The urgency of higher coverage is also reflected in how claim trends are shifting. In 2024-25, heart-related claims made up nearly 20% of total health insurance claims, up from around 10% five years earlier. Also, the average claim size for such cases has surged from Rs.4-5 lakh in 2019-20 to Rs.14-17 lakh today.
Customised products
Interestingly, the industry is evolving to match the shift. Insurers are designing more inclusive products, offering higher coverage limits, cashless treatments across wider hospital networks, and support services that extend well beyond hospitalisation. The market is responding not just to rising claims but to changing consumer expectations.
Expectations alone are not enough. There is a growing responsibility for all stakeholders to reframe the consumers’ approach to insurance. Premiums should be viewed as investments in resilience. Higher coverage should be encouraged. The long-term value of insurance must be placed front and centre, not just its annual price tag.
There’s also a macroeconomic angle to this conversation. A financially unprepared population facing unpredictable health costs creates downstream effects: reduced productivity, increased household debt, and rising pressure on public health infrastructure. In a country where out-of-pocket healthcare spending still forms a major share of total expenditure, underinsurance is not just a personal risk; it’s a systemic one. By helping more people access meaningful protection, we are safeguarding households and reducing the social costs of delayed or inadequate care.
Cracking the premium code, then, is not about finding the lowest number. It’s about asking the right questions: Will this coverage hold up five years from now? Can this policy support me through a complex medical episode? Does it enable me to act early and decisively when a health issue arises?
India is on the cusp of a healthcare transformation, but for it to be inclusive, we must build financial resilience into the very design of that journey. That begins by treating the premium not as a price, but as a promise.
The Auhtor is JOINT GROUP CEO, PB FINTECH
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
Most Indian households today are well aware of health risks from lifestyle diseases, the environment, and longer lifespans. Yet, financial preparedness, especially via health insurance, lags.
We still treat insurance premiums as a commodity cost. We search for the lowest number, equating affordability with adequacy. In reality, the cheapest policy may be the most expensive mistake. Cracking the premium code in 2025 demands a rethink of what health insurance means, what it should deliver, and how we must align it with the new economics of care.
Old playbook won’t work
Let’s look at the numbers. Over the past decade, the cost of hospitalisation, advanced procedures, and even routine diagnostics has climbed dramatically. Heart surgeries, cancer treatments, and critical care interventions now routinely cross the Rs.30-40 lakh mark. Cataract surgery, once considered minor, can now cost over 1 lakh in a top hospital.
These are indicators of a structural shift in healthcare pricing, driven by better medical technology, global standards of care, and increasing demand. At the same time, medical inflation in India has consistently hovered at 13-14% annually—double the pace of general inflation and far beyond the wage growth for most Indians. Some years, it has surged as high as 20%. This is not a spike; it’s a trend.
Over the past decade, the cost of major medical procedures has surged. A kidney transplant that cost around Rs.5 lakh in 2013 now exceeds Rs.18 lakh. A heart transplant, in some cases, can cost up to Rs.34 lakh. In this context, insurance covers of Rs.3-5 lakh are no longer adequate; they reflect an outdated cost structure. If we continue to treat premiums as just another line item in our budgets, rather than a bulwark against financial distress, we will continue to be caught unprepared.
Rising cost of critical care over the years
Therefore, a Rs.1 crore health cover isn’t a luxury; it’s the new normal. It reflects the real cost of care today and anticipates the increasing complexity of medical interventions tomorrow. It is not just about critical illness. It’s about diagnostics, consultations, follow-ups, mental health services, pre- and post-hospitalisation costs, and the growing expectation of quality care across every touchpoint. The comprehensive nature of healthcare today demands comprehensive financial coverage— and a rebalancing of what consumers consider ‘adequate.’
The good news is that increasing your health cover from Rs.10 lakh to Rs.1 crore doesn’t mean your premium will go up 10 times. For a young couple in their mid-30s, a Rs.1 crore plan can cost around Rs.2,000 to Rs.2,500 per month— only about 10-15% more than a Rs.10 lakh policy, but with much stronger protection.
The urgency of higher coverage is also reflected in how claim trends are shifting. In 2024-25, heart-related claims made up nearly 20% of total health insurance claims, up from around 10% five years earlier. Also, the average claim size for such cases has surged from Rs.4-5 lakh in 2019-20 to Rs.14-17 lakh today.
Customised products
Interestingly, the industry is evolving to match the shift. Insurers are designing more inclusive products, offering higher coverage limits, cashless treatments across wider hospital networks, and support services that extend well beyond hospitalisation. The market is responding not just to rising claims but to changing consumer expectations.
Expectations alone are not enough. There is a growing responsibility for all stakeholders to reframe the consumers’ approach to insurance. Premiums should be viewed as investments in resilience. Higher coverage should be encouraged. The long-term value of insurance must be placed front and centre, not just its annual price tag.
There’s also a macroeconomic angle to this conversation. A financially unprepared population facing unpredictable health costs creates downstream effects: reduced productivity, increased household debt, and rising pressure on public health infrastructure. In a country where out-of-pocket healthcare spending still forms a major share of total expenditure, underinsurance is not just a personal risk; it’s a systemic one. By helping more people access meaningful protection, we are safeguarding households and reducing the social costs of delayed or inadequate care.
Cracking the premium code, then, is not about finding the lowest number. It’s about asking the right questions: Will this coverage hold up five years from now? Can this policy support me through a complex medical episode? Does it enable me to act early and decisively when a health issue arises?
India is on the cusp of a healthcare transformation, but for it to be inclusive, we must build financial resilience into the very design of that journey. That begins by treating the premium not as a price, but as a promise.
The Auhtor is JOINT GROUP CEO, PB FINTECH
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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