Health insurance

What is it

Health insurance pays your hospital bills (fully or largely) in exchange for an annual premium. Think of it as a shield against the single biggest wealth-destroying event for most Indian families: a major illness. A ₹10L family floater costing ₹15,000-20,000/year can save you from a bill that would otherwise take years of savings to pay off.

Health insurance uptake accelerated sharply after the 2020-21 COVID-19 pandemic exposed how quickly hospitalisation costs could escalate and how many Indian families were uninsured or under-insured. IRDAI has since pushed insurers toward standardised policy wordings and faster claim settlement timelines.

Who it's best for

Every Indian household — even one hospitalisation can otherwise wipe out years of savings.

Who should avoid it

There's no scenario where you should avoid this — the question is only how much cover, not whether to have it.

Pros

• Protects savings and investments from being liquidated for medical emergencies
• Cashless treatment at network hospitals removes upfront cash stress
• Tax deduction under 80D on top of the protection itself

Cons

• Waiting periods (2-4 years) apply for pre-existing conditions
• Sub-limits and co-pay clauses can leave you with out-of-pocket costs — read the fine print
• Premiums rise with age and after claims

Key ratios to check