A recent study indicates that 75% of health insurance buyers in India have coverage of Rs 10 lakh or less, with many underestimating healthcare costs and a significant portion unaware of term insurance benefits. Despite an 18% growth in term insurance in FY24, a lack of awareness and understanding of personal finance among non-buyers hampers adoption, highlighting the need for better education on insurance and healthcare costs.
A recent study by Policybazaar reveals that despite the rising significance of health insurance in India, at least 75% of health insurance buyers have coverage of Rs 10 lakh or less, with 66% of policyholders in South India holding Rs 5 lakh or less. The report, “How India Buys Insurance 2.0,” highlights that nearly 48% of policyholders underestimate healthcare costs, opting for minimal coverage.
Additionally, 47.6% of Indians are unaware of term insurance and its benefits, which contributes to a significant awareness gap. The survey indicates that Indians still favor traditional investments like gold and real estate over health insurance, with only 28.3% considering it a priority compared to equities and mutual funds. Non-buyers also misjudge medical expenses, with 51% believing critical illness treatments cost under Rs 5 lakh, contrary to reality.
While term insurance grew by 18% in FY24, it remains low, with many non-buyers lacking awareness and understanding of personal finance. They often overlook essential financial considerations, such as child education and retirement needs, when planning for their family’s future. Experts recommend life insurance coverage of 15-20 times an individual’s annual income, but only 13% of non-buyers accurately gauge their insurance needs based on these guidelines. The findings stress the urgent need for improved education around health and term insurance in India to bridge the existing gaps.
