Health insurance policies with inflation-protection features offer an inflation-linked increase in the sum insured at renewal. According to reports from Mint, these policies appear to address the gap where a ₹10 lakh health insurance cover may become insufficient when the same surgery costs ₹15 lakh or ₹20 lakh in a few years. However, as noted by insurance consultant Akshay Bansal from Money Plant Project, an inflation-adjusted sum insured does not necessarily mean the insurance cover is keeping pace with actual medical inflation, which can be higher than general CPI inflation.
Recent market data reveals the effectiveness of inflation protection features. As reported by Mint, based on calculations of premium increases and sum insured changes over the last three to four years, the inflation bonus has been provided at approximately 6% of the sum insured when premiums increased by around 6%. This data suggests a direct correlation between premium increases and inflation bonus provisions, indicating the feature's practical application in the current market environment.
Corporate health insurance policies face significant limitations that make them insufficient for long-term medical protection. As reported by Mint, the biggest weakness is their connection with employment, as losing a job, taking a break, or retiring can end health insurance coverage. Even ₹10 lakh coverage may fall short during major hospital stays, with bypass surgeries and specialized cancer treatments costing ₹8 lakh to ₹15 lakh. Policy conditions can also raise out-of-pocket costs, with some corporate plans limiting daily room charges and requiring claim cost contributions of 10% to 20%.
According to insurance experts, the inflation-linked feature serves different purposes for different policyholders. As reported by Mint, experts believe this feature can be particularly useful for people with older health insurance policies where cumulative bonuses are capped. For such policyholders, the rider allows coverage to increase without requiring them to substantially increase the base sum insured, providing an additional layer of cover without major premium increases. However, for fresh buyers, the relevance may be low as many new health plans offer large or unlimited cumulative bonuses and restoration benefits.
Industry experts are questioning the value proposition of inflation protection features, particularly when offered as standalone riders. Neeraj Khushalani from InsureSmart told Mint that the only riders that matter are consumables, suggesting policyholders should examine the additional premium before opting for inflation protection. The expert recommended comparing the extra premium with the actual increase in coverage and examining whether the same money could instead be used to buy a higher base sum insured or a super top-up, emphasizing that adequate base coverage remains the first priority. Mint recommends building personal family policies worth ₹10-15 lakh with a ₹50 lakh super top-up and ₹5 lakh deductible to provide comprehensive coverage beyond employment dependencies.
