Health is Wealth: Then Why Many Indians Do Not Have Health Insurance?

Health is wealth, specifically in times when even spices, the king of the Indian kitchen, have been under scanner for containing carcinogenic elements. But how many of us have adequate health insurance so that if an emergency occurs (God Forbid), we would not run out of pocket? The recent health insurance statistics don’t display good signs!

Healthcare is one of the most important areas of the Indian economy, both in terms of revenue creation and employment. The whole healthcare industry is developing rapidly due to increased coverage, improved services, and more spending by both public and private entities. However, India takes a more decentralised strategy for health insurance penetration throughout the country. In India, having health insurance for yourself and your entire family is still optional. With such low health insurance coverage penetration, a bigger segment of the population ends up paying a major portion of their savings on growing healthcare costs because they are not insured.

So, what can be the probable reasons that keep Indians out of the basket of health insurance?

The “I’m too young for health insurance” phantom.

A prevalent misconception among Indians is that they are too young to purchase health insurance. Instead, many people believe they are too healthy to need insurance. But that is not the case. Purchasing health insurance while young and healthy offers its own set of benefits, including cheaper rates, no-claims bonus, and much more.

In India, there is a social belief that you are only susceptible to illnesses after you reach your 50s; nevertheless, according to a Stanford University research, South Asians, including Indians, have a 40% higher death rate from heart attacks than the rest of the globe. And the case of heart attacks is just a tip; do not forget the news from April 2024 when a report from Apollo Hospitals declared India to be the ‘cancer capital of the world’.

Moreover, health insurance, in particular, attracts resistance due to a widespread misconception of health risks. Many people assume they are immune to serious diseases or accidents, therefore they do not perceive the immediate need for health insurance. This perception of safety frequently leads to a delay in acquiring health insurance until a medical emergency occurs.

The delusion of high premiums and financial instability.

One of the key reasons why many Indians avoid purchasing health and life insurance is the widespread impression of affordability. In a country where a large percentage of the population struggles to satisfy basic financial demands, allocating cash for insurance premiums frequently falls to the wayside. Many people prioritise current needs like food, shelter, and education above long-term financial preparation, which includes insurance. Furthermore, there is a widespread misperception that insurance premiums are too expensive and beyond the means of the common Indian. While there are plans with hefty rates, many insurance companies give reasonable solutions geared to different income levels. 

According to a policybazaar.com survey last year titled ‘How India Buys Insurance,’ 43% of all respondents who did not purchase health insurance cited high premiums as the primary reason for doing so. Out of those who took the survey, 19% had no idea how health insurance coverage works. 33% of respondents said they did not feel compelled to get health insurance.

Cultural Mindset.

India is a country where common knowledge can be tossed when the majority of people are telling some different story, as you will be bound to listen to the mob, ignoring your knowledgeable wisdom. Cultural considerations also contribute significantly to insurance hesitancy. Historically, the notion of insurance was less popular in Indian society, resulting in a lack of familiarity and confidence. Furthermore, older generations may be reluctant to change and less inclined to use insurance because they consider it superfluous or unfamiliar.

Cultural mindsets and societal views significantly contribute to India’s poor health insurance acceptance. In certain circumstances, people believe that getting health insurance is not needed because of the traditional support structure in which family and community members join together to give financial aid during medical emergencies. However, as societies are moving towards nuclear families, this misconception needs to go away so that people do not stand alone in times of emergency, and there is an insurer to back them.

Also, in India, there is a historical and cultural preference for conventional savings mechanisms such as gold, fixed deposits, and real estate. These assets are frequently seen as more trustworthy and tangible sources of investment than insurance contracts. Indians perceive insurance as intangible, and they are concerned that their investment will not provide a return. Thus, a large chunk of Indians avoid taking health insurance as they feel there will be no ROI if the insurance remains unclaimed.

Lack of awareness.

Ironically, we live in a society where one can hardly forget to take motor insurance policies as they cannot afford any damage to their dear vehicles but hesitate to carry health insurance, which can put their lives and financial health at stake. Unlike motor insurance, the concept of health insurance is not compulsory in India, thus individuals often underestimate the need of acquiring one. Most Indians feel that health insurance has no assured return and is a risky investment because they are ignorant of the protection it may provide against unexpected medical crises.

Furthermore, many people, particularly in rural areas, are unclear of how insurance works and what it entails. They are generally unfamiliar with various forms of insurance, such as health, life, and property insurance.

Complexities of insurance. 

One of the major drawbacks of insurance schemes is their complexities. A report titled ‘Decoding Health Insurance: Why Many Indians Still Hesitate’ by Navi Health Insurance cites a shocking 45% of people who skip health insurance because of its perceived difficulties. Approximately half of people who shun health insurance believe it to be a difficult product to grasp. The complex terminology and confusing terms of health insurance plans sometimes discourage potential customers, leaving them unable to identify a suitable plan that suits their requirements.

Mistrust between different components.

There is a deficit in trust among hospitals, patients, and insurance companies. According to insurance data, fewer than 5% of insured people have diabetes. That is difficult since insurance firms rely on individuals’ declarations. They do not insist on preventative health screenings and deny claims after hospitalisation. A prevalent misconception about health insurance is that most claims are rejected without adequate reasons and that most insurers fail to help clients achieve the coverage promised, which may not be completely wrong. However, inadequate information by the clint also hinders the claim settlement process.

Also, mistrust of insurance providers is another major disincentive for potential policyholders in India. Several high-profile incidents of insurance claim denials and disputes have raised questions about the industry’s trustworthiness. People are afraid that insurers would find methods to avoid paying claims when they are most needed.

Finally, a lack of trust in the healthcare system itself adds to low health insurance uptake rates. Some people are concerned about the quality of healthcare services, the availability of doctors and experts, and the general stability of the healthcare system. This mistrust makes people less likely to invest in health insurance.

The bottom line.

In a world that is constantly changing and increasingly uncertain, insurance acts as a financial safety net, protecting people and families from unanticipated adversity. However, in India, a country with a rapidly growing population and different socioeconomic strata, there is still a significant reluctance to engage in health and life insurance.

Many Indians’ reluctance to engage in health and life insurance stems from a combination of financial considerations, lack of understanding, distrust, and cultural reasons. To address these difficulties, insurance companies, regulatory organisations, and educational institutions must work together. India can achieve increased insurance penetration by raising knowledge, simplifying insurance products, and fostering confidence via transparent processes. It is a journey that will take teamwork and effort but has the calibre to dramatically improve the nation’s financial security and well-being.