Average Health Insurance Cover Rises To Rs 19 Lakh After GST Removal

The average health insurance cover now stands at Rs 19 lakh, up 31 per cent after Goods and Services Tax (GST) on health insurance premiums was removed, a recent Business Standard report said. The change has been driven by a rise in the number of policyholders opting for higher sums insured following the tax exemption.

The report notes that GST had earlier added a noticeable cost to health insurance premiums. With GST out of the picture, more buyers are opting for higher sums insured, both for new purchases and renewals.

Demand Shifts Towards Higher Cover

Health insurance policies with cover below Rs 10 lakh are being taken up less after the GST removal. Many buyers now feel that such limits are not sufficient, given how hospital bills and treatment costs have risen in recent years.

In comparison, policies in the Rs 10 lakh to Rs 25 lakh range have seen a sharp increase in uptake. Policies with coverage of over Rs 25 lakh have also grown at a faster pace. Insurers say customers are factoring in the cost of surgeries, intensive care, and extended hospital stays while choosing the sum insured.

A significant part of this increase has come from existing customers. Many policyholders have increased their coverage at renewal, citing lower premiums after the tax exemption. Insurers say upgrades that were earlier postponed due to cost concerns are now being taken up.

Longer Tenures See More Interest

More buyers are now taking multi-year health insurance policies. Rather than renewing their plans every year, customers are choosing longer policy terms so that their cover continues without a break. Insurers say this reflects a growing tendency among policyholders to treat health insurance as a long-term necessity rather than a product bought only at the time of renewal.

This shift is not confined to large cities. Buyers in smaller towns and non-metro areas are also opting for higher health insurance cover. Increased access to private hospitals and higher medical costs have influenced purchase decisions in these areas.

Claims data continue to show that treatment for heart ailments, cancer, and age-related conditions account for a large share of high-value claims. These factors are pushing households to reassess whether their existing cover is sufficient.

The report notes that rising medical costs continue to worry policyholders. Expenses related to hospital care, including procedures that were once considered routine, have increased steadily over the years. As a result, lower insurance covers are proving inadequate for many households.

With GST taken out of health insurance premiums, insurers say interest in higher cover has continued. The increase in the average sum insured shows that many buyers are no longer sticking to minimum policies and are choosing larger covers to better meet hospital expenses.