Majority of Health Insurance Buyers in India Shy Away from Adequate Coverage
A recent report by Policybazaar highlights a concerning trend in the health insurance landscape of India. According to the findings, a striking 75% of health insurance buyers have coverage amounts of ₹10 lakh or less, raising alarms about the adequacy of financial protection for families during health crises.
Key Findings of the Report
The report, titled “How India Buys Insurance 2.0,” is based on a survey involving 3,955 respondents from various metropolitan, Tier-2, and Tier-3 cities across India. One major insight drawn from the research indicates a significant disparity in awareness levels regarding term insurance products. Alarmingly, around 47.6% of respondents remain unaware of term insurance and its associated benefits, underscoring a persistent gap in financial literacy.
In analyzing consumer attitudes towards health insurance, the report revealed that 28.3% of participants rated health insurance above traditional investment avenues like equities, mutual funds, and government bonds, signaling a shift towards recognizing its importance. However, despite this recognition, many individuals still lag in obtaining coverage that truly meets their healthcare needs.
The Impact of Underinsurance
The report emphasizes that the gravity of the situation is particularly pronounced in South India, where approximately 66% of policyholders maintain coverage of ₹5 lakh or less. The findings also suggest that many consumers are inclined to liquidate ancestral assets or take out loans in dire health situations instead of opting for straightforward financial solutions such as health or life insurance.
Sarbvir Singh, Joint Group CEO of PB Fintech, commented on the findings, stating, “This year’s report puts a spotlight on the awareness gap even more evidently than before. A large proportion of consumers plan to sell ancestral assets or borrow money during a crisis rather than opt for simple, accessible solutions like health and life insurance to protect their families. As an industry, it’s imperative that we strengthen awareness and improve the overall customer experience to drive broader adoption and ensure financial security for all.”
Understanding the Awareness Gap
The study emphasizes that lack of knowledge—particularly concerning personal finance—plays a critical role in hindering insurance adoption. Many potential buyers fail to consider essential financial responsibilities, including child education, marriage costs, loan obligations, and future medical contingencies while evaluating their family’s long-term needs.
Moreover, the report finds that many individuals underestimate the cost associated with critical illness treatments. Over half of the respondents believe that treatments for severe conditions, such as cancer or heart disease, would cost less than ₹5 lakh which is not reflective of current healthcare expenses.
Experts in financial planning typically recommend that life insurance coverage should be 15-20 times a person’s annual income to ensure that dependents can sustain themselves for an adequate duration. Yet, only 13% of those who do not buy insurance possess an accurate understanding of their coverage requirements based on expert guidelines.
Conclusion
In conclusion, the Policybazaar report clearly illustrates the pressing need for increased awareness and education around health insurance in India. The protection it offers is not merely an option but a crucial component of financial planning. For the Indian population, recognizing the importance of adequate coverage could potentially alleviate the financial strain during health emergencies and safeguard the well-being of families across the nation.
These insights encourage a deeper discourse on the necessity of financial literacy initiatives and industry efforts to make health insurance accessible and understandable for all segments of society. With health crises becoming increasingly unpredictable, now is the time to prioritize adequate coverage and make informed choices regarding health insurance.
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