Why Adequate Insurance Cover Matters More Than A Cheap Premium

Noida-based Ritesh Verma believed he had made a smart financial decision. While comparing health insurance policies online, he found one offering Rs 5 lakh coverage for just Rs 6,500 a year. It was significantly cheaper than most other plans. “Why pay double for the same thing?” he thought.

A year later, his father required cardiac bypass surgery. The hospital bill came to Rs 7.2 lakh. That’s when he realised how different insurance policies can be behind the headline number. His Rs 5 lakh policy eventually covered only about Rs 2.8 lakh. Room rent limits and proportionate deductions reduced the claim amount significantly. The family had to arrange the remaining Rs 4.4 lakh themselves.

Across India, many households buy health insurance, but often with coverage that turns out to be inadequate when a serious medical event occurs.

The Real Gap: Adequacy, Not Access

Health insurance awareness has improved considerably over the past decade. More people understand the need for coverage. Yet, a significant gap remains between having health cover and having enough protection.

Medical procedures that used to cost a few lakhs earlier can now cost much higher, particularly in private hospitals across large cities. A single cardiac procedure, cancer treatment or accident-related surgery can easily exceed Rs 6–10 lakh, depending on complexity and hospital choice.

At the same time, healthcare inflation in India continues to rise at double-digit rates. “Many people approach health insurance the same way they shop for consumer products: they compare prices first,” says Venkatesh Naidu, CEO of BajajCapital Insurance Broking Ltd. “But insurance is not about finding the cheapest premium. It’s about ensuring the coverage is adequate when a real medical situation arises.”

Why Low-Premium Policies Often Disappoint

Lower premiums often come with hidden trade-offs. These may not be obvious at the time of purchase but become visible during claims. One of the most common issues is room rent capping. If a policy restricts room rent to a certain percentage of the insured amount, choosing a higher-priced room in a hospital can trigger proportionate deductions across the entire bill.

Another limitation is disease-specific sub-limits. A policy may advertise Rs 5 lakh coverage but restrict payouts for procedures such as cataract surgery, joint replacement or cardiac treatment to much smaller amounts. Some plans also include co-payment clauses, requiring policyholders to pay a percentage of the claim themselves.

“The problem is not always that people don’t buy insurance,” Naidu explains. “It’s that they buy coverage that looks sufficient on paper but doesn’t translate into meaningful protection during treatment.”

What ‘Adequate Cover’ Really Means

Adequate coverage depends on multiple factors like family size, city of residence, lifestyle risks and healthcare inflation. For many urban families today, advisors typically suggest a base health insurance cover of at least Rs 10–15 lakh. People who care for elderly parents or live in big cities might need more extensive insurance coverage.

A sensible strategy is to supplement existing protection with a super top-up plan. This allows a base policy to handle everyday hospital visits, with the super top-up kicking in for more substantial claims, thereby boosting overall coverage without a huge jump in premiums.

Critical illness policies offer lump-sum payments for serious ailments like cancer or heart disease, assisting families in covering medical expenses and offsetting any temporary loss of income.

A Change In Perspective

Insurance premiums are easy to compare. But the true value of insurance only becomes visible when a claim occurs.

Naidu says, “The objective of insurance is not to minimise premium outgo. The objective is to minimise financial disruption when health events happen.” For most families, healthcare costs are among the largest unexpected financial risks they will ever face. Choosing insurance purely on the basis of price may reduce the premium today, but it can also create significant out-of-pocket expenses tomorrow.

Adequate cover may cost a little more each year. But in the long run, it is often the difference between a medical challenge that can be managed and a financial setback that takes years to recover from.