Having health insurance is not the same as being adequately protected

Summary

Health cover should evolve with income, family responsibilities and medical needs. The real test is whether insurance, savings and other protection can absorb a serious health event without derailing financial goals.

Health insurance is an important part of financial planning, helping individuals and families manage healthcare expenses without putting undue pressure on their savings. As more people recognize the value of having health cover, the next step is to assess whether that protection continues to meet their needs.

Healthcare and financial needs change over time. A policy that was appropriate when first purchased may need to support different circumstances as income, family responsibilities, savings and healthcare needs evolve. Alongside asking, “Do I have health insurance?”, it is equally important to ask, “Is the protection I have adequate for my needs today?”

Cover in context

There is no single sum insured that works for everyone. Consider two people who each have ₹20 lakh of cover. One may also have employer-provided insurance and enough savings to comfortably manage smaller medical expenses. The other may depend largely on that one policy, support ageing parents and have less room to absorb an unexpected healthcare cost. Their sum insured is identical, but their overall financial protection is not.

The goal, therefore, should not simply be to maximize the sum insured, but to match protection to risk. A higher sum insured can be useful, but it is only one part of the picture. Consumers also need to consider the healthcare expenses they could realistically face, what their insurance would cover and how much they could pay out of pocket without disrupting other financial priorities. They should also account for the wider impact of a serious health event, particularly if it affects their ability to work or requires a family member to take time off to provide care.