As healthcare costs rise and consumers become more aware of claims and coverage gaps, the health insurance purchase decision is increasingly shifting from price to protection.
For years, premium was one of the biggest considerations when Indians bought health insurance. That is changing, particularly among younger, urban and digitally engaged consumers.
Today, buyers are increasingly asking whether their preferred hospitals are covered under a cashless network, how claims are likely to be handled and whether the sum insured will actually be sufficient when a major medical event occurs.
This shift comes amid growing uncertainty about the effectiveness of existing health insurance cover. A Future Generali India survey of 800 insured individuals aged 25 and above found that more than 80% were unsure about the real-world efficacy of their health cover. Two-thirds said they felt insecure or inadequately covered when facing an actual claim and unexpected bills.
For insurers, this suggests that competing primarily on premium may become less effective among informed consumers. Hospital network, coverage breadth, recharge benefits and claims servicing are becoming increasingly important parts of the value proposition.
Higher cover is gaining traction
The definition of "adequate" health insurance cover is also changing.
₹20 lakh and above is increasingly being considered by informed buyers. * Independent data supports the broader trend towards higher coverage. A Policybazaar study of more than 10,000 millennial buyers across 15 states found that the share of policies with a sum insured of ₹10 lakh or more more than doubled over five years, from 8.4% to 17.8%.
A 2025 NielsenIQ survey for HDFC ERGO found that 37% of Gen Z and millennial respondents were deliberately opting for higher coverage to protect themselves against rising medical costs.
The shift is particularly relevant in metropolitan markets, where treatment costs can be significantly higher. Some insurer guidance, for instance, recommends a minimum sum insured of ₹25 lakh for metro cities. This is not a market-wide benchmark, but reflects the growing pressure on consumers to reassess whether traditional ₹5 lakh or ₹10 lakh covers are sufficient.
Young Indians are taking charge of family protection
The health insurance decision-maker is changing too.
Young adults are increasingly involved in selecting health insurance not just for themselves, but also for their parents. * This is significant because the buyer and the person insured may have very different needs.
Independent research shows that younger Indians are becoming more conscious of health insurance. A Niva Bupa study found that 51% of young Indians ranked health insurance among their top three financial priorities, although only 14% actually owned a policy. A separate NielsenIQ survey of 2,200 respondents across 17 cities found that 61% of Gen Z and millennials prioritised investing in health insurance. Yet younger consumers are not necessarily becoming fully self-service buyers. Many research and compare policies online before turning to an agent or advisor for the final decision. The NielsenIQ study found that 61% compared policies on aggregator websites, while 60% still preferred to transact offline and trusted an agent for the final decision.
This points towards a hybrid insurance journey: digital discovery followed by human-assisted decision-making.
Portability is becoming part of the conversation
Consumers are also becoming more willing to review policies rather than simply renew them year after year.
Market interactions indicate increasing interest in policy reviews and portability, particularly where consumers are dissatisfied with coverage or servicing. * The scale of this shift is yet to be established through nationally representative data.
IRDAI's portability framework allows policyholders to move their health insurance policy at renewal while retaining continuity benefits for waiting periods already served on the existing sum insured. Policyholders generally need to initiate the process 30 to 60 days before renewal, while the new insurer continues to underwrite the customer afresh.
This makes the renewal window increasingly important for insurers and distributors. A policy review ahead of renewal could become an important retention tool rather than waiting for the customer to initiate a port.
Claims remain the industry's trust test
The growing focus on coverage and servicing is closely linked to consumer concerns around claims.
According to the IRDAI Annual Report for FY25, general and standalone health insurers successfully processed and settled 3.26 crore health insurance claims, disbursing a total claim payout of ₹94,248 crore during the financial year.
The issue is not simply whether claims are settled. Consumers also need clarity around exclusions, waiting periods, documentation and the reasons behind partial disallowances or repudiations.
That is where the industry's post-sale experience becomes critical.
The next competition could be around servicing
INKA's market interactions also point to a potential gap between selling a health policy and servicing it over its lifetime. In some cases, customers report limited engagement from their original distributor after the first year, even as renewal-linked economics continue.*
The same market interactions suggest that poor distributor servicing can become a reason for customers to consider portability, even when they may not have a fundamental problem with the insurer's product.*
If this pattern is validated at a larger industry level, it could have implications for how distributors are compensated and how insurers measure post-sale engagement.
The broader direction is clear: health insurance is increasingly becoming a product where consumers want more than a competitive premium.
They want adequate coverage, access to hospitals, transparent claims processes and someone to help them when they actually need the policy.
For insurers and distributors, the strategic imperative is moving from transactional selling to lifelong policyholder engagement. That shift requires delivering the right sum insured from day one, paired with continuous service touchpoints and dedicated claims support when it matters most.
*The observations marked with an asterisk are based on INKA’s proprietary field interactions with users. These observations are directional in nature and should not be interpreted as statistically validated or independently representative of the broader insurance market. They are intended to provide market context and consumer-level insights, and should be read alongside the independently sourced data cited in the article.
NOTE: This article is created & compiled by VCCEdge Research Team.
Insights Focus is a marketing initiative for sponsored posts. No VCCircle journalist was involved in the creation of this content.
