Medical Corpus Is Useful, But It Can’t Replace Health Insurance

With rising health insurance premiums and news of health claims being rejected, many people plan to meet medical expenses by building a health corpus. We take a look at whether this is feasible.

Building a dedicated medical corpus can be a useful financial buffer, but it is generally difficult for it to fully replace health insurance. Healthcare costs in India have been rising steadily due to medical inflation, and hospitalisation for major illnesses or surgeries can run into several lakhs.

“Since medical emergencies are unpredictable, relying solely on accumulated savings can expose households to significant financial risk if a large expense arises earlier than expected. Health insurance, on the other hand, transfers that risk to the insurer and provides immediate financial protection even if the policyholder has not accumulated a large corpus,” says Arun Ramamurthy, co-founder, Staywell.health.

The Limits Of Self-Insurance

For a household to realistically depend on self-insurance, the required corpus would need to be substantial and liquid, often running into several tens of lakhs to comfortably cover potential high-cost treatments in urban hospitals.

“The size of a medical corpus needed for complete self-insurance would vary greatly. This would depend on factors such as age, family size, existing health conditions, and the cost of healthcare in the person's city of residence,” says Dodeja.

“This approach is generally more feasible for affluent households with high disposable income, strong long-term investments, and the ability to replenish funds if large medical expenses occur. Even in such cases, maintaining a dedicated medical reserve requires disciplined financial planning and careful assessment of future healthcare costs,” says Ramamurthy.

Why Insurance Still Matters

A balanced approach that combines a medical corpus with a base health insurance can provide both flexibility and financial security. “Health insurance is designed to cover catastrophic or high-cost medical events such as any major hospitalisation or surgeries, while a personal medical corpus can help manage regular healthcare expenses, deductibles, or medical treatments that may not be fully covered under a policy,” says Dodeja.

Experts typically recommend combining a medical corpus with at least a base health insurance policy or a super top-up plan because insurance protects catastrophic expenses that could otherwise deplete savings quickly.

“A basic policy or super top-up ensures that large hospitalisation costs are covered, while the corpus can be used for smaller medical expenses, deductibles, or treatments not fully covered under insurance. This combination helps balance risk protection with financial flexibility,” says Ramamurthy.