Too Late for Cover? Why Many Indians Face Insurance Rejections or Higher Premiums

For many Indians, health insurance is something they think about only when they are forced to. A survey and claims data study by Plum, an insur-tech platform offering employee wellness solutions, shows that most people first encounter insurance through their employer.

And while this has helped build awareness, it is also exposing a growing problem: people wait too long to buy personal policies, only to discover that coverage is either expensive or unavailable.

According to the report, 59 per cent of employees do not own an individual health plan and rely solely on employer-sponsored group insurance. In fact, 40 per cent of the recent retail policy sales came from people who had already made a claim under their employer’s cover, suggesting that real interest begins only after a medical emergency or health scare.

However, it can be too late by then. The data shows that in the past six months:

• 54 per cent of personal insurance consultations resulted in either outright rejection or higher premiums.

• Roughly 20 per cent of applications were denied altogether because of high health risks

• Another 34 per cent were accepted only with “premium loading” - extra costs ranging between 10 per cent and 50 per cent for those with pre-existing conditions such as diabetes, hypertension, or other chronic risks

This trend is worrying, given that 71 per cent of India’s workforce is already at risk of chronic disease, according to Plum’s Employee Health Report 2025. “Most people don’t realise that we don’t really ‘buy’ health insurance, we apply for it,” explains Atul Mishra, Head of Plum Personal. “And the later you apply, the higher the chance of rejection.”

The stagnation in retail health insurance numbers is visible in Irdai’s own handbook. While group health insurance coverage has been expanding rapidly, growing at an annual rate of around 20 per cent, retail coverage has barely moved.

Between financial year (FY) 2020 and FY23, the number of people covered by group insurance more than doubled from 94 million to 199 million. By contrast, retail coverage rose only from 43 million to 53 million in the same period.

This reliance on employer-provided coverage has also shaped buying behaviour, for instance:

• Only 25 per cent of individual policy buyers are women, and most purchases are made by men for family floater plans.

• Coverage for parents is becoming a growing priority, especially among younger workers under 30, with a quarter of them prioritising parental cover even before their own.

However, there are clear frustrations among the buyers. Take this for instance:

• As per the report, nearly all applicants who request maternity add-ons eventually drop the plan, largely because of long waiting periods.

• Similarly, about one in five consultations come from people who are already ineligible for insurance, often due to pre-existing conditions like heart disease or cancer.

The bigger issue, insurers say, is the reactive mindset. Over half of the survey respondents admitted they only considered insurance after a life event such as marriage, a job change, or a health emergency. This delay makes cover more expensive and, in some cases, impossible to secure.

As Abhishek Poddar, CEO of Plum, points out, developed markets saw insurance penetration grow only when employer schemes and government programmes worked in tandem with personal policies.

India, he says, is now on a similar trajectory. But until more people start taking individual coverage early, many will continue to learn the hard way that waiting too long for insurance often means paying more, or being left out altogether.