Why Health Insurance Premiums Are Rising in India — and What You Can Do About It

If your renewal premium has increased, you are not alone

If your health insurance renewal premium has increased this year, you are not alone.

Many policyholders are seeing noticeable increases at renewal, particularly as healthcare costs continue to rise and insurers reassess the cost of providing coverage.

For families, the increase can be frustrating. A policy that once seemed affordable may suddenly feel expensive—especially when the premium rises year after year.

But rising premiums are not necessarily just about insurers charging more. Several factors influence the price of health insurance, including medical costs, claims experience, age, location, sum insured and the features included in your policy.

So, why are health insurance premiums rising in India—and what should you do about it?

1. Medical costs are rising

One of the biggest factors behind health insurance premium increases is the rising cost of healthcare.

Hospitalisation, surgeries, diagnostic tests, medicines, specialist consultations and other medical services have become more expensive over time.

Even when the cost of a particular treatment increases by only a few percentage points, the impact can be significant for an insurer handling thousands of claims.

For example, if a procedure that costs ₹1 lakh today becomes significantly more expensive over the next few years, insurers ultimately have to account for that increase when pricing health insurance products.

This is one reason your health insurance premium may increase even if you personally have never made a claim.

2. Healthcare costs can vary significantly by city

The cost of treatment is not the same across India.

Treatment at a large private hospital in a metropolitan city can cost substantially more than similar treatment at a smaller hospital or in a smaller city.

Room categories, specialist fees, diagnostic charges, technology used, hospital infrastructure and other factors can all influence the final hospital bill.

As more policyholders seek treatment at reputed private hospitals, insurers have to account for these higher claim costs when pricing their products.

3. Insurers are paying more in claims

Health insurance works by pooling risk across a large number of policyholders.

When the overall cost or frequency of claims increases, insurers may need to reassess premiums to maintain the financial sustainability of their products.

This does not mean every premium increase is directly linked to an individual's claims history.

Your renewal premium can change because of broader factors affecting the entire portfolio of customers covered under the product.

This is why a policyholder who has never filed a claim can still receive a higher renewal quote.

4. People are choosing higher sum insured

Health insurance awareness has increased significantly in recent years.

Many consumers who previously considered ₹2 lakh or ₹3 lakh sufficient are now looking at ₹10 lakh, ₹20 lakh or even higher coverage.

That is generally a positive development because medical bills can quickly exhaust a small sum insured.

However, a higher sum insured also means a larger potential liability for the insurer. The premium therefore tends to increase with the level of coverage and the risk profile of the insured.

The important point is that buying adequate coverage is usually more important than simply choosing the cheapest premium.

5. Age has a major impact on premium

Age is one of the most important factors in health insurance pricing.

As people get older, the probability of hospitalisation and certain medical conditions generally increases. Insurers therefore price policies differently across age bands.

This is particularly important for senior citizens, who can experience significantly higher premiums compared with younger policyholders.

In January 2025, IRDAI issued a circular specifically concerning the review of premium revisions for senior-citizen health insurance policies, reflecting the regulator's focus on affordability and customer interests.

6. Your policy features also affect the premium

Two people of the same age can pay different premiums for health insurance.

Why? Because the premium also depends on several other factors.

• Sum insured
• Individual or family floater structure
• Deductible
• Co-payment
• Room-rent restrictions
• Add-ons and optional benefits
• Geographic location
• Policy terms and conditions
• Insurer's pricing for the particular product

Comparing the headline premium is not enough

This is why simply comparing the headline premium is not enough.

A cheaper policy may come with restrictions that could increase your out-of-pocket expenses during a claim.

IRDAI itself advises consumers to pay attention to room-rent limits, waiting periods, exclusions, sub-limits, co-payment and the list of eligible hospitals when evaluating health insurance.

7. GST changes have reduced the tax component for individual health insurance

There is also some good news for individual policyholders.

Following the recommendations of the 56th GST Council meeting, GST was exempted on individual health insurance policies, including family floater and senior-citizen policies. The change took effect from 22 September 2025.

This means the GST component no longer adds 18% to the premium for eligible individual health insurance policies.

However, it is important to understand the distinction: GST relief does not mean the underlying insurance premium cannot increase. The base premium can still be revised based on factors such as healthcare costs, claims experience, age and product pricing.

8. Why your renewal increase may be different from someone else's

There is no single percentage by which everyone's health insurance premium increases.

Your renewal price can depend on your individual circumstances and the insurer's pricing for your specific product.

For example, two policyholders may have very different circumstances.

• Different ages
• Different sum insured
• Different cities
• Different policy features
• Different family compositions
• Different insurer products

Don't assume someone else's increase applies to you

As a result, their renewal premiums can change by very different amounts.

So, don't assume that a premium increase quoted to someone else will apply to your policy.

How to manage rising health insurance premiums

A higher renewal premium can make you want to immediately reduce your coverage or cancel the policy.

Think twice before doing that.

Losing continuity of health insurance can be far more expensive than paying a somewhat higher premium today.

Instead, consider these options.

1. Don't automatically reduce your sum insured

Reducing your coverage may make the premium cheaper, but it also reduces your financial protection.

A ₹5 lakh policy that was adequate several years ago may not provide the same level of protection today.

Before reducing your sum insured, explore whether you can restructure your coverage more efficiently.

2. Consider a super top-up

A super top-up can be an economical way of increasing your overall health insurance protection.

Instead of paying for a very large base policy, some consumers may choose a reasonable base policy and supplement it with a super top-up.

However, understand the deductible and claim conditions before buying one. A super top-up is not simply an extra sum insured that automatically pays from the first rupee of every claim.

3. Review your no-claim or cumulative bonus

If your policy provides a cumulative bonus or no-claim bonus, check how much additional coverage you have accumulated.

IRDAI defines cumulative bonus as an increase in the sum insured granted by the insurer without an associated increase in premium.

Don't switch or restructure a policy without understanding what benefits you may lose or carry forward.

4. Review whether a family floater makes sense

For many younger families, a family floater can be more cost-efficient than buying separate individual policies.

A family floater provides one shared sum insured that can be used by any or all covered family members.

However, a family floater isn't automatically the best option for every family. Age, health profile and the number of members covered should be considered before making a decision.

5. Consider a deductible or co-payment carefully

A deductible or voluntary co-payment can reduce the premium in some policies.

But there is a trade-off.

If your policy requires you to pay a portion of the medical expenses yourself, you need to make sure you can comfortably afford that amount when a claim occurs.

A cheaper premium isn't necessarily better if the resulting out-of-pocket liability is unaffordable.

6. Compare before renewing—but don't cancel first

If your premium has increased substantially, compare alternatives before simply accepting the renewal quote.

However, never cancel an existing policy first and then start looking for another policy.

A new insurer may impose underwriting requirements, exclusions or different terms. Your existing policy may also have valuable continuity benefits.

If you decide to switch insurers, explore portability rather than allowing the existing policy to lapse.

IRDAI's health insurance guidance confirms that portability allows policyholders to transfer eligible credits such as waiting-period credits and other continuity benefits to the acquiring insurer, subject to applicable terms.

7. Don't confuse portability with migration

These two terms are often misunderstood.

Portability means moving your health insurance policy from one insurer to another while carrying eligible continuity credits.

Migration refers to moving to another health insurance product offered by the same insurer.

They are not the same thing.

Understanding this distinction can help you make better decisions when your existing policy becomes expensive or no longer suits your requirements.

8. Consider multi-year policies carefully

Some insurers offer multi-year health insurance policies.

A multi-year policy can provide convenience and, depending on the product, greater premium predictability.

However, don't assume that buying a multi-year policy automatically protects you from every future pricing change.

Always read the policy terms and understand how premium, benefits and renewal conditions work before choosing this option.

9. Check your tax benefits

Health insurance premiums may qualify for deductions under Section 80D of the Income Tax Act, subject to eligibility and the applicable tax regime.

However, tax treatment can differ depending on whether you use the old or new tax regime and based on your individual circumstances.

So, don't calculate your effective insurance cost using a tax benefit unless you are actually eligible for it.

10. Review unnecessary add-ons

Your health insurance policy may contain optional benefits or add-ons that you no longer need.

Review them before renewal.

But don't remove an important benefit merely to save a small amount of premium.

The goal should be to optimise your policy—not simply make it cheaper.

Should you switch health insurance because your premium increased?

Not necessarily.

A higher premium alone isn't enough reason to switch.

Before changing insurers, compare several factors.

• Coverage
• Waiting periods
• Existing disease coverage
• Room-rent restrictions
• Co-payment
• Deductibles
• Sub-limits
• Network hospitals
• Claim servicing
• Renewal terms
• Cumulative bonus
• Portability benefits
• Premium over the long term

Consider your existing continuity benefits

Most importantly, consider your existing health status and the continuity benefits you have already accumulated.

A policy that looks cheaper today may not necessarily provide better value when you actually need to make a claim.

What should you do when your renewal premium jumps?

Don't panic—and don't let your policy lapse simply because the renewal premium is higher.

Instead, follow these steps.

• Step 1: Check exactly why the premium has increased.
• Step 2: Review your current coverage and policy benefits.
• Step 3: Check whether your sum insured is still adequate.
• Step 4: Compare alternative plans on coverage, not just premium.
• Step 5: Explore a super top-up or other suitable restructuring options.
• Step 6: If considering another insurer, understand portability before making any change.
• Step 7: Renew on time to protect your continuity benefits.

Renew on time to protect your continuity benefits

IRDAI specifically advises policyholders to renew their health insurance on time because a break in coverage can affect continuity benefits.

The bottom line

Health insurance is becoming more expensive—but reducing your protection isn't always the right answer.

Rising healthcare costs, claims experience, age, coverage levels, location and policy features can all influence premiums.

The smarter approach is to review your policy every year and make informed changes where necessary.

Instead of simply asking 'How can I get the cheapest health insurance premium?' ask 'How can I get the right protection at a premium I can sustainably afford?'

That shift in thinking can help you avoid two common mistakes—overpaying for unnecessary features and underinsuring yourself just to save money.

At BimaParichay, our goal is to help consumers understand health insurance in simple language so they can compare, choose and manage their coverage with greater confidence.

Remember: A lower premium is useful only when the policy still protects you when you need it most.