For years, ₹10 lakh was considered a safe health insurance cover for an urban Indian family. It felt sufficient and financially prudent. Today, that comfort is fading fast.

Healthcare costs in India are rising much faster than household incomes. Medical inflation is now estimated at 12–14 per cent annually, far above the general inflation of around 5 per cent.

This means a hospital bill that cost ₹5 lakh a few years ago can now easily touch ₹8–10 lakh, especially in metro cities and top-tier private hospitals. A major surgery, cancer treatment, cardiac intervention or prolonged ICU stay can wipe out a ₹10 lakh cover far quicker than policyholders expect.

Shrinking cover

Health insurance adequacy is not just about the number printed on your policy document. It is about what that number can actually buy when a medical emergency strikes.

A ₹10 lakh cover purchased five years ago does not offer the same protection today. With healthcare inflation compounding annually, its effective value keeps shrinking.

Recent economic survey data shows that while out-of-pocket expenditure on healthcare has declined from historic highs of nearly 60 per cent, it still remains high at around 48 per cent of total healthcare spending. This means even insured families continue to bear a significant financial burden.

Private hospital costs have risen sharply across surgeries, diagnostics, room rents, implants and specialist consultations.

At top-tier private hospitals in metros like Delhi-NCR, Mumbai, and Bengaluru, advanced cancer treatment can range from ₹15 lakh to ₹30 lakh. Liver and heart transplants frequently exceed ₹25–40 lakh.

Even ICU charges can be devastating. Premium hospital ICU costs range from ₹30,000 to ₹80,000 per day, meaning a 15-day ICU stay, along with procedures, can easily exhaust a ₹10 lakh policy.

Rising premiums

The most difficult phase often comes later in life, when healthcare needs increase, but income growth slows down.

Health insurance premiums rise significantly with age because the probability of a hospitalisation event rises. Moving from one age band to another, especially after 45, 50, or 60, can trigger steep premium jumps. A policy that feels affordable in your 30s or early 40s can become significantly more expensive by your 50s, even without major claims, simply due to higher age-related risk and underwriting changes.

This is why starting early makes a meaningful difference. Buying health insurance at a younger age not only helps lock in lower premiums but also ensures continuity benefits such as waiting period completion, better claim eligibility, and uninterrupted coverage before lifestyle diseases begin to appear.

Insurers now offer the option of an ‘unlimited’ cover, meaning there’s no upper cap on the sum insured. Having such a cover earlier in life makes tremendous financial sense. Increasing your sum insured later, when health risks are higher, often comes with higher premiums and stricter underwriting. In almost all cases, a higher sum insured at the time of renewal comes with a fresh waiting period on the enhanced sum insured. Many insurers also offer multi-year policies that help customers lock in rates for longer periods and protect against frequent annual premium revisions.

The recent GST rationalisation has given an opportunity to buyers to go for a higher sum insured in a comprehensive health insurance plan.

Home care

Healthcare is no longer limited to hospitalisation. Recovery increasingly continues at home.

Post-surgery nursing, physiotherapy, elderly care, palliative support, chronic disease management, and doctor-supervised home monitoring are becoming essential parts of treatment. For senior citizens, especially, home care is often not optional but medically necessary.

A stroke patient may require months of physiotherapy and attendant support. A cancer patient may need regular home-based nursing and follow-up care. Elderly patients recovering from fractures or surgeries often require trained caregivers for weeks. Unlike a one-time surgery bill, home care quietly drains savings over months.

This is where families realise that the real cost of illness is not just treatment, but recovery.

Layered approach

Instead of relying only on a flat ₹10 lakh cover, a layered approach offers far stronger financial protection.

One option is to choose a higher base cover, such as ₹20 lakh, and strengthen it with cumulative bonus booster riders. Many health plans offer 100 per cent of the base sum insured as a no-claim bonus every year, allowing the cover to grow substantially over time.

Another effective option is opting for unlimited sum insured plans. This becomes especially valuable during serious illnesses such as cancer treatment, organ failure or cardiac complications.

A layered plan should also go beyond hospitalisation alone. Coverage for OPD consultations and consumables such as gloves, PPE kits, syringes, and other non-payable items can significantly reduce out-of-pocket spending. These are often the hidden expenses that families end up paying from their own savings despite having insurance.

Health insurance should not be seen as a fixed one-time purchase, but as a living financial plan that evolves with age, family responsibilities and rising healthcare costs.

The writer is business head of health insurance at Policybazaar.com