Leading standalone health insurer, Apollo Munich Health Insurance has found that 51% of health insurance policyholders in India are underinsured, that is, have purchased low sum insured health insurance policies that would not suffice in medical emergencies.
Apollo Munich studied around 7 lakh health insurance policyholders spread across 82 cities in India, and has found that both men and women across metros, tier 1 and 2 cities and towns are underinsured. At 52% men are more underinsured than women at 46%.
‘People in their 20s should ideally have a sum insured cover of Rs. 5 lakhs if residing in a metro, Tier 1 or 2 cities.’
Although the number of health insurance policyholders in India is increasing annually, people most often choose the lowest sum insured policy, without comprehending the entire process of choosing an appropriate cover. Some of the reasons are lack of awareness about how to pick the right sum insured, overdependence on corporate health insurance coverage,willingness to pay a premium that is only up to the highest limit of rebate under Section 80D of the Income Tax Act etc.
The company has been able to conclude that underinsurance is more prevalent in the higher age brackets as 62% of policyholders above 45 years of age are underinsured. The slight respite to this grave problem is that young people seem to be choosing the right sum insured comparatively,since at 38% people between 18-35 years are the least underinsuredsegment amongst all other age groups. The underinsurance percentage of people between 61-65 years is 75%. One of the main reasons for this alarming underinsurance statistic is that policyholders do not upgradetheir sum insured on the basis of their increasing age, changing needs and medical inflation.
The research also threw light on the fact that South India has the maximum number underinsured people amounting to 59% of policyholders, while the underinsurance percentage in the North, West, East and Central parts of the country is 49%, 49%, 48% and 45% respectively.
Speaking about the research, Antony Jacob, CEO, Apollo Munich Health Insurance, said, "On the one hand India faces a challenge of lack of health insurance penetration, on the other hand those who have health insurance are underinsured. Underinsurance is a somberproblem as it not only results in increased stress and sudden out of pocket expenditure for policyholders during times of medical exigencies, but also gives them a false sense of assurance of being covered. People must understand that health insurance is not just a tax saving tool, and therefore be mindful while choosing a sum insured for themselves and their family."
"At Apollo Munich,we have developed an innovative devise-agnostic application for our advisors 'Ampower' that functions on a Business Rule Engine (BRE) for instant policy issuance and automated underwriting. The 'Ampower' app also suggests an optimal coverageto customers while buying or renewing a policy based on various factors. We conduct regular training for our advisors to offer the most appropriate insurance solutions to our potential and existing customers on the basis of the algorithm we have developed over years of analysis and research. We also have a dedicated team that educates customers about choosing the right sum insured at the time of policy renewal. Through various marketing and social media initiatives, we continuously engage with our customers and educate them about the need of choosing right sum insured as per their individual needs."Mr. Jacob added.
The study also reveals: People in their 20s should ideally have a sum insured cover of Rs. 5 lakhs if residing in a metro, Tier 1 or 2 cities. People in the 30s and 40s should have at least a cover of Rs. 7 lakhs while residing in a metro or Tier 1 city. Those residing in Tier 2 cities should have a cover of Rs. 6 lakhs. Those nearing retirement age (that is are in their 50s) should seek policies with Rs. 9 lakhs, if he or she is residing in a metro or Tier 1 city. In Tier 2 cities a sum insured policy of Rs. 8 lakhs should be sufficient. Indians above the age of 60 years should own health insurance coverage of at least Rs. 10 lakhs sum insured to be able to manage their healthcare costs.