'Being underinsured feels fine until crisis hits': CA warns Indians on false sense of health security 

For many Indians, insurance remains a mere formality—a checkbox to tick for tax savings or bank loan approvals. But as rising medical costs collide with modest insurance covers, the financial consequences are hitting home like never before.

“Being underinsured feels fine—until it really, really doesn’t,” warns CA Abhishek Walia, a financial advisor who has seen the fallout of inadequate coverage up close. “Most people buy insurance purely for compliance, not for genuine protection.”

The typical mindset, Walia explains, is simple: pick the cheapest plan with the lowest premium and move on. But that decision can prove catastrophic in times of crisis.

“I recently read a claim where the policyholder had Rs 5 lakh health cover,” he recounts. “The hospital bill was Rs 17.4 lakh. The remaining Rs 12.4 lakh had to be paid out-of-pocket, and the family took a personal loan to manage it.”

Such stories, though alarming, are not rare. Walia believes a major reason is that people are never taught to ask the right questions when buying insurance. “We should be asking: Is this coverage enough for a Tier 1 hospital? Does my policy cover the illnesses I’m actually vulnerable to? Will it keep up with medical inflation ten years from now?”

Instead, he observes, consumers are lured by flashy sales pitches focusing on tax benefits or bundled products. “We hear ‘investment-cum-insurance’ more than we hear ‘what if you’re hospitalized for 10 days?’” says Walia.

Medical inflation in India has been soaring, with annual increases often outpacing general inflation. Hospitalisation costs in Tier 1 cities can range from ₹50,000 to over ₹3 lakh per day in critical care. A single illness can wipe out years of savings or plunge families into debt.

“The hard truth is this: you’re not financially prepared if you’re not properly insured,” stresses Walia. “And no, a single ₹5 lakh mediclaim isn’t enough anymore—not in 2025.”

Even those with employer-provided insurance often fall into the underinsured trap. Corporate health plans may offer ₹3-5 lakh covers, but these limits can quickly exhaust during major treatments like cancer care, cardiac surgeries, or long ICU stays.

Walia urges individuals to review their policies carefully and consider top-up plans or higher coverage. “If you live in a big city, a ₹10-15 lakh base cover plus a top-up of ₹20-50 lakh is the bare minimum,” he advises. “And make sure you understand what illnesses and procedures are excluded.”

The message is stark but necessary. Insurance, Walia insists, should be treated as a vital part of financial planning, not merely an obligation. “Treat insurance as a risk management tool, not as a tax-saving investment. Because when illness strikes, the premium doesn’t matter—the payout does.”

In a world where hospital bills can rival luxury car prices, it’s a lesson Indians can no longer afford to ignore.