Consumption-Based Health Covers Take Centrestage In 2025, Says Report

India’s health insurance market is undergoing a structural shift, with consumers increasingly opting for policies that can be utilised frequently, rather than only during hospital stays. This transformation is captured in a recent report by Policybazaar on consumption plans, which shows that categories like maternity benefits, outpatient department (OPD) add-ons, and emerging health wallet products dominated buyer behaviour this year. The trend reflects a wider change in how young families and routine-care-driven households think about medical expenses, viewing insurance not just as a crisis shield, but as a budgeting tool, too.

Maternity And OPD Drive The New Wave Of Adoption

Maternity benefits were the standout category of 2025, recording a sharp 150–180 per cent year-on-year (y-o-y) surge. The report notes that nearly 96 per cent of maternity cover buyers were purchasing health insurance for the first time, signalling that pregnancy has become a catalyst for financial planning among young households. Almost 77 per cent of the buyers were in the 18–35 age group, and women dominated the segment, although men were also increasingly purchasing these add-ons for their spouses. Rising delivery and antenatal costs, ranging from consultations and diagnostics to supplements and scans, appear to be nudging families toward structured coverage.

Meanwhile, OPD add-ons have retained strong momentum, contributing 10–15 per cent of all health policies sold. The largest buyer group were in the 45–60 age bracket, reflecting the needs of families managing chronic conditions, regular check-ups, and diagnostic expenses. Younger households were also embracing OPD, using it to cushion recurring medical bills. The report highlights a usage rate of around 40 per cent, significantly higher than typical hospitalisation-linked claims, underscoring the everyday utility of OPD covers.

Health Wallets Gain Traction; Tier 2 And 3 Cities Lead Demand

An interesting early trend is the rise of health wallets, which allow customers to pre-fund routine care, cover non-payable expenses, and even use wallet balances for future premiums. About eight per cent of maternity buyers already opted for this model, indicating that savvy young consumers were open to prepaid, reward-linked ways of managing healthcare expenses, according to the report.

Analysts believe health wallets could soon follow the same adoption curve OPD saw a few years ago.

Another striking pattern is the geographic mix of demand. Tier 2 and Tier 3 cities now account for 55–60 per cent of purchases in categories, such as OPD and maternity. Cities such as Bengaluru, Delhi, Hyderabad, Mumbai, Ernakulam, and Pune continue to dominate, but the wider spread suggests rising awareness and cost pressures across urban and semi-urban India.

Elsewhere, sum-insured preferences indicate that consumers prefer modularity and control: OPD covers are almost entirely purchased as add-ons, and maternity insurance is overwhelmingly chosen in the same manner. Renewal rates stay strong at over 80 per cent in the first year for both categories, rising further over time.

Industry Outlook: A Consumption-First Era

Siddharth Singhal, head of health insurance, Policybazaar, said: “As we look ahead, it’s clear that India’s health insurance industry is entering a consumption-first era. OPD will increasingly become a non-negotiable part of every health plan, as consumers seek value they can use throughout the year. Maternity covers will continue to bring in a large share of new buyers. We also expect Health Wallet models to grow rapidly, as they mirror the way households prefer to manage healthcare budgets—through prepayment, reward accumulation, and reuse. With rising medical costs and a young workforce, Tier 2 and Tier 3 markets will emerge as major growth engines for the industry. As consumer expectations evolve, our focus will remain on building products that are practical, predictable, and truly people-first.”

From budgeting-friendly OPD benefits to maternity add-ons and prepaid wallet models, India’s health insurance landscape is increasingly aligning with everyday needs, marking a decisive shift toward products that offer continuous, tangible value rather than episodic protection.