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82% of Urban Indians are not Covered Under Health Insurance. Why?

19 May 2022, 2:59 PM

Buying health insurance has become a basic necessity today due to the rapidly rising costs of healthcare facilities. Improper lifestyle and inadequate work-life balance have led to young individuals even suffering from many lifestyle ailments. The expenses incurred in the medical treatment during a medical emergency are high enough to deplete your savings completely. In such scenarios, a medical insurance plan would provide you coverage for unexpected medical expenses and thus, save you from further stress due to finances during a medical emergency.

India and Underinsurance

However, there is a major part of the Indian population that is not insured under any medical insurance policy yet. 

According to various survey reports, over 82% of the Indian urban population does not have health insurance, and the remaining population is underinsured. It means people who have insurance are also not adequately covered. People are busy using their hard-earned savings for paying the hospital bills rather than opting for the purchase of health insurance policy. Many people even resort to selling their assets or taking loans from friends and relatives for meeting medical expenditures.

According to a report by the British Medical Journal, stated that 55 million Indians have been pushed into poverty in one single year only because of medical expenses. Out of this, 38 million people have moved into poverty only because of the high cost of medicines!

The National Sample Survey Office (NSSO) has reported that almost 86% of the rural population and 82% of the urban population are not covered under any health insurance.  

Around 12% of households in Urban India have taken up health insurance from the private sectors. The private sectors provide around 80% outpatient and 60% of inpatient care; however, its cost is too high for all to afford.  It has also been found from an NSSO survey that the coverage of health insurance in the country is mainly co-related to the standard of living in the urban and rural sectors of the country. 

The majority of the people in urban India do not realize that they are quite underprepared to face medical emergencies which might come up in the future. The recent pandemic and its associated expenses have made the situation even worse.

Why is the Health Insurance Penetration So Low in India?

Let us talk about some of the major causes which are responsible for the lack of adequate health insurance amongst the Indians in the urban sectors.

  1. Lack of Awareness
    Medical insurance plans are not mandatory in our country, unlike motor insurance. This can be said as one of the most important reasons why many people do not even bother about it as they are not bound by the legal system to purchase it. 
    The majority of the urban population still believe that the purchase of health insurance is pointless as you do not receive anything in return. The self-realization about the importance of health insurance comes when medical emergencies strike and create a big hole in your pocket.
  2. Illiteracy
    The major factor which contributes to the unawareness of the urban population towards health insurance is illiteracy. Education leads to exposure and plays an important role in bringing forth the benefits of health insurance for the poor and needy people. In India, the right to information is a fundamental right; however, there is a big section of the urban middle level income population that lacks adequate exposure to the information which has been issued for the common people. 
    There are public medical insurance plans too but common people lack exposure to such information. The private health sector has been dominating the public ones leading to the absence of proper insurance for the needy in the country. 
  3. Myths about Affordability
    A part of the urban population also considers that it would be difficult to afford health insurance policies as they would have to pay the insurance premiums regularly. However, this is not true as there are several health insurance plans available in the market which are pocket-friendly. Also, the medical insurance premium can now be paid on a monthly, quarterly, or yearly basis which makes it affordable for normal middle-class people as well. 
    Also, family floater health insurance plans and top-up options can be used to make the health insurance plans affordable.
  4. Claims do not Get Settled
    Many urban people believe that health insurance providers do not approve health insurance claims on time. These beliefs are not true as claim settlement is quite prompt among the insurance providers. Proper research on the incurred claim ratio of the insurance provider must be done before purchasing the health insurance policy.
  5. The Illusion of Being Healthy
    It is a common scenario of overestimating the capabilities of one's health. You might believe that you might not fall ill ever. However, the environment today is highly polluted and the improper lifestyle can make you susceptible to various ailments. Even if you are fit today does not imply that you will be fit tomorrow as well. Especially, considering the current pandemic situation across the globe. So, to increase the probabilities of survival even if you are affected by any illness or ailment a health insurance policy is a must-have.
  6. The Unforeseen Situations
    The covid-19 pandemic has reinstated the importance of emergency planning. The unexpected, the accidents and the pandemics always come unannounced! So, it is best to save for a rainy day while it’s sunny. That would save us a lot of inconvenience at a later point in time!


Hence, the socio-economic development of a country and its health go together. There is rapid economic development in the country and the health system can be improved further. The government has launched health schemes for the benefit of the rural section of the economy like Ayushman Bharat, etc. Awareness drives /campaigns among common people by both the public and private health insurance sectors are necessary throughout the country. Enlightenment of the common people about the benefits and the essence of health insurance can help in increasing the percentage of the population who are insured under health insurance plans.

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