10 Reasons Why Many Indians Avoid Health Insurance

Posted on: Dec 23, 2024 | 3 mins | Written by: HDFC ERGO Team

10 Reasons Why Many Indians Avoid Health Insurance

Imagine you get hospitalised, and looking at the cost of treatment, you regret not buying a health insurance plan. While you are sure that the thought of purchasing a plan crossed your mind, a friend of yours convinced you that it would just be a waste of money. Well, many people think that health plans are unnecessary. They can give different reasons for why they believe so. Often, people who have had their claim requests rejected become the biggest critics. Well, let’s explore the various reasons Indians don’t buy health insurance.

Factors Contributing to Low Health Insurance Penetration in India

1. Lack of Awareness

One primary reason for low health insurance penetration in India is the lack of awareness about health insurance and its benefits. People, particularly in rural areas and among economically weaker sections, have limited knowledge about how health insurance works and how it can safeguard them against medical expenses.

2. Trust issues with insurers

Many people hesitate to buy health insurance because they lack faith in insurance companies. They believe their claims can get denied or delayed, or the insurer may not come to their aid when they need the much-needed financial protection. The hidden terms and conditions are another reason why some people stay away from health insurance.

3. Perceived High Cost

Many Indians feel the premiums are quite high and unaffordable. This could be because they lack knowledge about the various plans available and that premiums depend on the scope of coverage and benefits. Those in the lower-income groups consider health insurance premiums as an additional cost.

4. Limited coverage

It’s true that some policies offer limited coverage. Assuming that all policies are the same, with many exclusions and waiting periods and fear of being denied coverage for pre-existing conditions and specific ailments, many people are reluctant to invest in health insurance.

5. Lack of Customisation Options

If health insurance does not meet my needs, why should I invest in it? Many people believe that health plans lack flexibility and cannot be tailored to align with their specific needs and preferences, for which they skip buying health insurance.

6. Dependence on Group Health Insurance

When employees and their families are covered under group health insurance, they don’t feel the need for individual health insurance or family floater. However, it is recommended to have health insurance as a backup because the group health insurance plan provides coverage till they are employees of the organisation.

7. Cultural Mindset

Many Indian households rely on personal savings or family support for medical expenses. This cultural mindset and societal beliefs prevent them from investing in health insurance.

8. Complex Claim Procedures

The lengthy and complicated process of filing and processing claims can discourage people from buying health insurance, especially when they are already going through the stress of a medical emergency.

9. Perceived Low Value

The assumption that health insurance plans do not provide the desired value for the premium paid is another reason for low health insurance penetration in India. Some believe that the benefits do not match the cost of the health plans, particularly when compared to other investment options.

10. No Immediate Benefits

Health insurance provides financial protection only when you require hospitalisation due to an ailment, planned procedure, or emergency accidental hospitalisation. Many people avoid health insurance because it doesn’t provide immediate returns or benefits, unlike other investments, unless you fall ill. For them, it is an additional burden.

Conclusion

Creating awareness about health insurance benefits is one of the ways to address health insurance challenges in India. If you look at medical inflation, a single hospitalisation can cause a big financial burden, and having a health insurance policy can save your finances from getting drained. Critical illness insurance is also advisable if you are at an increased risk of developing critical ailments.

FAQs

1. Is health insurance mandatory in India?

No, health insurance is not mandatory, but securing yourself and your loved ones with a comprehensive health insurance policy is highly recommended to stay financially prepared against any exigencies. It ensures you have access to quality healthcare and treatment without denting your savings.

2. What are the factors to be considered while buying health insurance?

While buying health insurance, there are several factors you must consider, such as the scope of coverage, premiums, waiting periods, network hospitals, deductibles, inclusions and exclusions, the claims process of the insurance company, etc. These will help you pick the plan that aligns with your health needs.

3. I have a pre-existing disease. Will health insurance cover treatments related to the condition?

Yes, health insurance policies cover pre-existing medical conditions like diabetes, hypertension, etc., but after a waiting period of 1-3 years, depending upon the insurer. But you must disclose your condition while buying the policy. If the insurer finds out later that you have hidden any medical history, it can lead to claim rejection or cancellation of the policy.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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