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How Much Should I be Paying for Health Insurance?

In the FY2018, health insurance penetration in India stood at a meagre 35%. As per the Insurance Regulatory and Development Authority of India (IRDAI)’s chairman, out-of-pocket spending on healthcare is as high as 64%. Apart from a lack of awareness about

  • 2,358 Views | Updated on: Mar 13, 2024

In the FY2018, health insurance penetration in India stood at a meagre 35%. As per the Insurance Regulatory and Development Authority of India (IRDAI)’s chairman, out-of-pocket spending on healthcare is as high as 64%.

Apart from a lack of awareness about the benefits, affordability is a driving factor behind such low health insurance penetration. But the government of India’s Economic Survey shows the average retail healthcare inflation rate as 7.14%. Thus, quality healthcare today is expensive. Hence, with cashless treatments and medical expense reimbursements, health insurance leads to more savings than spending.

But how much should you spend for a health plan to get enough cover in medical emergencies? Here’s a guideline.

How are health insurance premiums calculated?

Knowing the factors that affect premium calculations can help you buy
sufficient coverage without overspending.

Your premium reflects the insurer’s assessment of the likelihood you
will raise a claim. Factors that play a role include:

1. Coverage: The range of benefits and size of health cover your policy provides have a direct bearing on its premium.

2. Age: Increased age enhances susceptibility to health problems, with a higher probability of needing medical assistance. Thus, older policyholders have to pay higher premiums.

3. Health condition: Existence of chronic ailments, and unhealthy habits, such as smoking or consumption of narcotics, can raise your health insurance premium.

4. Claims history: For every claim-free year, insurers reward you with additions to your coverage. Thus, placing lesser claims can get you higher financial protection for a low premium.

How much should you pay for health cover?

Consider the following parameters before making the decision:

1. Age and health of the policyholder:

If you are young, or fit, you need not spend more on an all-inclusive health plan.

2. Type of health insurance policy:

An individual health insurance policy costs less than a family floater plan. Moreover, family floater prices depend on the age of the eldest family member covered. You could buy separate policies for your parents, keeping your spouse and children under a family plan.

3. The number of people covered under the policy:

A large number of financial dependents would need you to spend more, to cover them under health insurance.

4. Type and number of riders availed:

If you suffer from critical ailments like diabetes, hypertension, or heart problems, you should cover such conditions under your insurance plan. With riders, you can extend your coverage for a nominal increase in price. Benefits that waive off premiums in case you cannot pay them because of health issues can also be useful.

Also, some plans offer monetary compensation to your nominee in case of a fatal accident. If you work in hazardous conditions or have a lot of travel by a personal vehicle, you can buy an accidental death benefit rider.

5. Mode of purchase - online or offline:

Online policies often offer discounts on premiums. Buying online reduces the overhead costs for insurance companies, which translates to lower premiums for you. Also, when you buy online, you eliminate the costs of middlemen, thus ensuring a low premium.

6. Percentage of deductibles selected:

If you enjoy good health or need not cover aged or very young family members, you can opt for higher deductibles, which is the percentage of your medical bills you agree to pay yourself. Higher deductible lower your premium.

7. The number of inclusions bought with the policy:

Look for plans that offer in-built benefits to avoid spending more on extra coverage and riders.

Kotak Health Shield – a pocket-friendly health plan

Kotak Health Shield plan offers:

  • Financial protection against four critical illnesses under a single plan
  • Accidental death or disability cover
  • Waiver of premium and income benefit options
  • In-built facility for medical repatriation, evacuation, etc.
  • This plan can thus cover you against the most prevalent medical issues.


    How much you should spend on health plans depends on your health insurance needs. Considering critical illnesses require expensive treatments, buying a health plan specific for such conditions can safeguard you against financial blows. With a host of in-built benefits and options for extra coverage, Kotak Health Shield is a viable option for such needs.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

Kotak e-Term

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  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


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