Why Indians Are Quitting Health Insurance in 2025: High Premiums, GST Burden, and Claim Rejections

Why Indians Are Quitting Health Insurance in 2025

Why Indians Are Quitting Health Insurance in 2025: In recent years, India’s health insurance market has seen a troubling shift. Once considered a critical safety net, health insurance is now being increasingly abandoned by middle-class families and individuals. The rising cost of premiums, compounded by the 18% GST, is making it unaffordable for many. Add to that the growing number of claim rejections, hidden clauses, and limited coverage, and it’s easy to see why people are questioning whether health insurance is even worth it.

One such case is that of Subhadip Ghosh, a 38-year-old IT professional from Kolkata. He had taken a Rs 5 lakh family floater policy in 2016 for Rs 22,000 annually. Fast forward to 2025, the premium for the same policy has surged to Rs 78,000—more than a 250% increase. While his family size and health conditions have remained largely the same, the hike is attributed to aging, medical inflation, GST, and administrative fees. For Subhadip, the rising costs and the growing unpredictability around claim approvals pushed him to let go of his policy.

This isn’t an isolated case. Across India, millions of policyholders are now reconsidering their health insurance plans. Whether it’s the high renewal premiums, confusing terms and conditions, pre-existing disease clauses, or delays in claim settlement, the problems are multifaceted. As a result, many Indians are choosing alternative strategies like building emergency health funds, using government health schemes, or relying on out-of-pocket payments.

Who Can Apply for Health Insurance in India?

Despite the challenges, health insurance remains crucial—especially for those prone to medical emergencies. Here’s who can apply:

  • Individuals aged 18 to 65 years (some policies offer senior citizen coverage beyond 65).
  • Families: Most insurers offer family floater policies that cover spouses, children, and even parents.
  • Senior Citizens: Specialized plans are available but come with higher premiums and more restrictions.
  • Employees: Many companies provide group health insurance to their employees, but this ends when the job ends.
  • Self-Employed Professionals & Freelancers: Can apply for individual health plans or small group policies.

Current Health Insurance Fees in 2025

Health insurance fees have been escalating rapidly. Here’s a snapshot of average premiums in 2025:

Policy TypeCoverageAnnual Premium (Approx.)
Individual (Age 30)Rs 5 lakhRs 18,000 – Rs 25,000
Family Floater (2A + 2C)Rs 5 lakhRs 50,000 – Rs 75,000
Senior Citizen (Age 65+)Rs 3 lakhRs 30,000 – Rs 65,000
Top-up PlansRs 10 lakhRs 6,000 – Rs 12,000

How to Use Health Insurance in India

Using your health insurance effectively involves several key steps:

  1. Cashless Treatment: Check if your hospital is in the insurer’s network. Show your e-card or policy number for direct settlement.
  2. Reimbursement: If treated in a non-network hospital, pay upfront and submit bills for reimbursement.
  3. Pre-Authorization: For planned treatments, seek pre-approval from the insurer to avoid complications later.
  4. Claim Tracking: Use the insurer’s mobile app or website to monitor your claim status.
  5. Renew on Time: Missing renewal dates can result in policy lapse and denial of future claims.

Benefits of Having Health Insurance

Despite the downsides, health insurance still offers some undeniable benefits:

  • Financial Protection: Prevents massive out-of-pocket expenses during emergencies.
  • Tax Benefits: Under Section 80D, you can claim deductions up to Rs 25,000 (or Rs 50,000 for senior citizens).
  • Cashless Facility: Reduces hassle at the time of hospitalization.
  • Annual Health Check-Ups: Many policies offer free check-ups after 1-2 years.
  • Maternity & Critical Illness Coverage: Some plans now include these, though with waiting periods.

How to Apply for Health Insurance in 2025

Applying for health insurance in India is easier than ever:

Online Mode:

  • Visit official insurer websites (e.g., HDFC Ergo, Star Health, Niva Bupa)
  • Compare plans on aggregator sites like PolicyBazaar, Coverfox, or BankBazaar
  • Fill in personal and health details
  • Upload medical reports if required
  • Make payment and receive digital policy

Offline Mode:

  • Visit branch offices or speak to a licensed agent
  • Submit physical forms and documents
  • Medical tests may be required for higher coverage or age

Important Dates (2025–2026)

EventDate
Health Insurance Awareness MonthJuly 2025
IRDAI New Guidelines ReleaseExpected by August 2025
GST Council Review on Health PremiumsNovember 2025
Open Enrollment Period (Most Insurers)December 2025 – January 2026

Disclaimer

This article is for informational purposes only. Health insurance policies vary by provider and are subject to change based on IRDAI regulations, insurer-specific clauses, and market conditions. Readers are advised to read the policy document thoroughly and consult with certified insurance advisors before making decisions.

Why Indians Are Quitting Health Insurance in 2025 Conclusion

Health insurance in India is undergoing a significant crisis. What once seemed like a secure shield against medical expenses is now riddled with cost escalations, limited benefits, and bureaucratic hurdles. While the government continues to promote health coverage through schemes like Ayushman Bharat, private players are finding it difficult to retain customers due to the widening affordability gap.

IRDAI Official Website The biggest challenge today is restoring trust in the system. If insurers hope to retain policyholders, they must improve transparency, ease of claims, and offer customizable plans that address the unique needs of different demographics. Another critical need is for the government to reconsider the high GST rate on health insurance, which unfairly burdens the middle class and senior citizens.

For the average Indian, dropping health insurance may seem like the only way out—but it’s a risky gamble. Medical emergencies can strike at any time, and without adequate financial backup, they can be devastating. That’s why it’s crucial to explore low-cost top-up plans, government schemes, and critical illness riders that can offer some coverage without burning a hole in your pocket.

Ultimately, health insurance should not be a luxury. It should be an accessible, reliable safety net for every Indian. Until the ecosystem is fixed, many will continue to walk away—putting their health and finances at greater risk.

Why Indians Are Quitting Health Insurance in 2025 FAQs

1. Why are so many Indians quitting health insurance in 2025?

Many Indians are giving up their health insurance due to skyrocketing premiums, 18% GST, and rising cases of claim denials. The feeling of not getting adequate value for the premium paid is leading to mass dropouts.

2. Is it safe to rely only on government health schemes like Ayushman Bharat?

While Ayushman Bharat offers free treatment up to Rs 5 lakh for eligible families, it is only valid in select hospitals and for limited conditions. It’s best used in conjunction with a private policy or a health savings fund.

3. How can I reduce my health insurance premium?

You can reduce premiums by opting for higher deductibles, taking top-up plans instead of base policies, maintaining a healthy lifestyle, and comparing policies online for the best deals. Avoiding unnecessary riders also helps lower costs.

4. What are the alternatives if I don’t want traditional health insurance?

You can consider building an emergency medical fund, joining cooperative health societies, enrolling in employer-provided group health insurance, or using digital health wallets and OPD subscription services.

5. Will the government reduce GST on health insurance in 2025?

As of now, there is no confirmed plan to reduce GST from 18%. However, several health forums and industry stakeholders are lobbying for this reduction, and a review by the GST Council is expected later in 2025.

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