Average cancer claim rises 81% in 5 years: How much health cover is enough? | Personal Finance

A Rs 5 lakh or Rs 10 lakh health insurance policy may appear adequate, but rising treatment costs can reduce the financial cushion available to a family, particularly in the case of cancer and other serious illnesses.

“The financial exposure from critical illnesses can be significant,” Siddharth Singhal, head of health insurance at Policybazaar, told Business Standard.

However, the amount a policyholder ultimately pays from their own pocket cannot be determined simply by looking at the average claim, he said. It depends on the policy’s sum insured, room-rent eligibility, co-payment, deductibles and sub-limits.

When a Rs 5 lakh policy falls short

Singhal explained what could happen if a family faced a cancer hospitalisation costing around the current average claim.

If a cancer hospitalisation results in a Rs 5.6 lakh bill and the policy provides adequate coverage without any applicable co-payment, deductible or sub-limit, a large part of the bill could potentially be covered by insurance, Singhal said.

But a policyholder with a Rs 5 lakh sum insured faces a shortfall of at least Rs 60,000 against a Rs 5.6 lakh bill. The actual out-of-pocket amount could be higher if some expenses are not payable under the policy, he said.

The report’s data also shows why simply matching the sum insured with today’s average claim may not be enough. Cancer recorded the highest claim inflation among the major disease categories, with treatment costs rising 10–14 per cent annually, according to the report.

“Families should look at health insurance as a protection against future treatment costs, rather than simply comparing the sum insured with today’s average claim,” Singhal said.

Even a Rs 10 lakh cover should not automatically be considered sufficient, particularly for families living in metros, he said.

The report said that the average hospitalisation claim in Tier-I cities was Rs 1.73 lakh, compared with Rs 1.20 lakh in Tier-III cities, making the average claim in Tier-I cities 44 per cent higher.

Singhal said people should consider factors such as their city of residence, number of family members, age, existing health risks, medical inflation and the possibility of needing specialised treatment when reviewing their cover.

For metro families, Policybazaar recommends considering a Rs 1 crore overall cover through a combination of a base policy and a super top-up, Singhal said.

The surgery is not the entire hospital bill

The report also highlights another likely blind spot: the assumption that insurance covering the main procedure means the hospital bill is largely taken care of.

Its analysis found that surgery accounted for 32 per cent of bills for cancer and blood-related conditions and 32 per cent for heart and blood-pressure-related conditions. For bone and muscle conditions, surgery accounted for 43 per cent.

But several other expenses can add significantly to the final bill.

For cancer and blood-related treatment, medicines accounted for 16 per cent of the bill and investigations another 9 per cent. Miscellaneous expenses made up 18 per cent.

For heart and blood-pressure-related hospitalisations, miscellaneous expenses accounted for 25 per cent, while surgery made up 32 per cent, medicines 11 per cent and investigations 9 per cent, according to the report.

“Consumers should not assume that having insurance to cover the surgery automatically means the entire hospitalisation is financially covered,” said Singhal.

Medicines, diagnostics, consumables and other hospital charges can collectively form a substantial part of the final bill, Singhal said. He also advised consumers to consider relevant add-ons and riders, including those covering consumables and outpatient treatment, depending on their requirements.

Why working-age Indians cannot simply postpone cover

Health insurance is often associated with older age, but the Policybazaar report found that people aged 26–45 accounted for 56 per cent of all claims in its analysis.

One of the most common mistakes is assuming that being young means health insurance can be postponed, Singhal said. Another is relying entirely on employer-provided health insurance or continuing with a low sum insured for several years without reassessing it.

Policyholders may also focus on the premium while paying less attention to exclusions, room-rent limits, co-payments, deductibles and other policy conditions, he said.

For example, consider a 35-year-old with a Rs 5 lakh health policy who subsequently faces a cancer hospitalisation costing around Rs 5.6 lakh — the average cancer claim cited in the report for 2026. The basic sum insured would already fall short by around Rs 60,000, even before non-admissible expenses are considered, according to Singhal.

The point is not that every family needs the same amount of health insurance. Rather, the report’s data and Singhal’s explanation show why the adequacy of a policy needs to be reassessed as treatment costs, age, family responsibilities and healthcare needs change.