As many as 51 per cent of young Indians rank health insurance among their top three financial priorities but only 14 per cent actually own a policy, said a report by Niva Bupa Health Insurance, marking a gap between awareness and action.
The report’s “Health Protection Score” (HPS), a composite measure of preparedness for medical emergencies, gives India’s young population an average of 4.54 out of 10, placing the cohort in the “somewhat vulnerable” category.
Nearly 76 per cent of young Indians fall into “vulnerable” segments, with only 24 per cent “adequately prepared”, financially or medically, for unforeseen health events.
This gap stems largely from perception. Many respondents believe they are financially secure because they are currently healthy. However, the report suggests this confidence is often “unverified” and not backed by actual financial preparedness or preventive health behaviour.
Intent and action
Data shows that affordability is not the primary barrier. Instead, behavioural factors dominate:
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Many young Indians believe health insurance is needed later in life -
Many prioritise liquidity and short-term savings over long-term protection -
Insurance is often viewed as an expense rather than a safeguard
Young Indians allocate about 26 per cent of their income to savings and 14 per cent to lifestyle spending, but only 8 per cent goes towards insurance products, with personal health insurance accounting for just 1 per cent.
This reflects a broader financial pattern: Disciplined cash-flow management but inadequate risk protection.
The “too healthy” trap
A key insight from the report is the “illusion of invincibility”. Around 38 per cent of respondents said they do not buy insurance because they believe their family is healthy.
This mindset leads to delayed decision-making. Many individuals avoid medical check-ups and rely on self-assessment rather than clinical validation, creating a false sense of security.
The report highlights that non-owners are less likely to engage in preventive care, making them more vulnerable to sudden health shocks, both medically and financially.
Ownership signals financial discipline
Interestingly, health insurance ownership correlates more with financial behaviour than income alone.
According to the report, individuals who own health insurance tend to:
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Diversify their investments across instruments -
Manage liabilities more effectively -
Plan for long-term financial stability
This suggests that insurance is not merely a product of affordability, but a marker of financial maturity.
Family and rising costs drive decisions
For those who do purchase insurance, the motivation is largely practical and emotional. Key drivers include:
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Protection for family members -
Rising healthcare costs -
Access to quality hospitals
Word-of-mouth recommendations also play a significant role in initiating interest, while final purchase decisions are often influenced by agents, banks, or personal networks rather than purely digital channels.
High drop-off rates remain a concern
Even among those who buy insurance, retention is weak. Around 6 per cent of policyholders lapse their coverage, with nearly half exiting within the first three years.
The reasons are telling:
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46 per cent cite inability to afford premiums -
34 per cent discontinue because they feel healthy -
31 per cent prefer investments that offer visible returns
This indicates a persistent misunderstanding of insurance as a low-value product unless actively used.
Financial risk
The findings point to a structural issue in personal finance behaviour. Young Indians are saving, but not adequately protecting themselves against low-frequency, high-impact risks such as medical emergencies.
Without insurance or sufficient emergency funds, a single hospitalisation can disrupt long-term financial plans, increase debt, or erode savings.
As the report notes, insurance ownership not only improves financial readiness but also encourages healthier behaviour and regular medical engagement, creating a positive feedback loop.
What needs to change
The core challenge is not awareness but relevance and timing. Health insurance is still seen as a “future need” rather than an immediate necessity.
Bridging this gap will require:
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Reframing insurance as essential financial protection -
Simplifying product understanding -
Improving trust and perceived value
Financial planning that prioritises liquidity without protection leaves a critical gap. As healthcare costs continue to rise, delaying insurance may prove costlier than buying it early.
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