Health insurance adoption in India has undergone a dramatic transformation, with unlimited sum insured (SI) health insurance plans surging from just 0.05% in FY25 to 15.19% in FY27. According to Policybazaar's data, while FY26 saw the biggest jump, the momentum has continued into FY27, with adoption more than doubling year-on-year. This represents a 300-fold increase in adoption rates over just two years, as reported by Business Standard. The trend suggests that consumers are increasingly worried that traditional health insurance covers may not be enough to meet the cost of modern medical treatment, particularly for serious illnesses that require multiple hospitalisations or expensive procedures.
The trend reflects a fundamental shift in consumer thinking about health insurance coverage. As reported by Policybazaar, consumers are increasingly worried that traditional health insurance covers may not be enough to meet the cost of modern medical treatment, particularly for serious illnesses that require multiple hospitalisations or expensive procedures. Healthcare costs in India have risen sharply, with hospital bills for complex treatments often running into several lakhs of rupees, even policies with sums insured of ₹10 lakh or ₹20 lakh can get exhausted after prolonged treatment. According to Policybazaar, consumers are no longer gradually increasing their cover from ₹5 lakh to ₹10 lakh or ₹20 lakh. Instead, many are directly opting for very high or unlimited protection when purchasing a policy.
Contrary to traditional perceptions, younger consumers are driving adoption with millennials accounting for nearly 57% of unlimited SI purchases in FY27, while Gen Z contributed more than 30%. According to Policybazaar's data, people below the age of 45 represented almost nine out of every 10 buyers. The data suggests younger Indians increasingly see health insurance as an essential part of long-term financial planning rather than a product to be purchased later in life. Geographically, Tier-I cities accounted for just over one-third of Unlimited SI purchases in FY27, down from more than half in FY25, while Tier-II cities increased their share from 17% to 25%, and Tier-III cities contributed nearly 42% of all purchases in FY27. Among individual cities, Surat recorded the highest increase in average ticket size, followed by Hyderabad and Mangalore, with NCR, Bengaluru and Pune also reporting healthy growth.
The trend extends beyond traditional demographics, with more than one in three NRIs purchasing health insurance now choosing unlimited SI plans, compared with virtually none in FY25. As reported by Policybazaar, around one in six new policyholders opted for unlimited SI plans in FY27, while similar adoption was seen among customers porting their existing health insurance policies. Individual policies continue to dominate with adoption reaching over 18% among individual policy buyers in FY27, compared with nearly 13% for family floater policies. Customers purchasing these plans are also increasingly adding extra protection, with around 90% opting for consumables cover to reduce out-of-pocket expenses on items such as gloves, masks and syringes, while about 70% selected Day-1 coverage benefits wherever available.
Siddharth Singhal, business head for health Insurance at Policybazaar, stated that the sharp rise in unlimited SI adoption reflects a significant change in consumer thinking. According to Singhal, Indians are increasingly recognising that conventional health insurance may not be sufficient to keep pace with medical inflation. The growing preference for add-ons such as consumables cover and Day-1 benefits indicates that buyers are looking for comprehensive protection that minimises out-of-pocket healthcare expenses. While unlimited health insurance can provide significantly higher financial protection, experts say buyers should not assume every policy offers identical benefits. Before purchasing, policyholders should carefully check the policy's definition of "unlimited" coverage, waiting periods for pre-existing illnesses, room rent and treatment-related restrictions, network hospitals and claim settlement features, and premium affordability over the long term.
