Does bigger cover provide better protection? Not quite, think twice

Excessive health coverage can become unaffordable as you age and may force some policyholders to drop plans

- Deepti Bhaskaran

Is bigger always better when it comes to health insurance? Not necessarily.

While it might seem reassuring to opt for extremely high coverage, such plans can become prohibitively expensive as you age, forcing some policyholders to drop their policies just when they need them most.

So what might be a more sensible approach? The co-founder of Ditto Insurance, Shrehith Karkera, suggests a cover of ₹10-15 lakh for most peopleeven though Ditto's claims data shows that the average payout is only ₹2.8 lakh, calibrated to strike a balance between adequate protection and long-term affordability, helping people maintain a coverage without facing financial strain as they age. "Say you have incurred ₹25 lakh of expense due to a terrible accident. You need extensive care, possibly recurring. Health insurance is meant for such catastrophic and recurring events," Karkera explained at the Mint Money Festival while talking about some of the pain points of health insurance.

Higher coverage could impact renewals

Karkera stressed the importance of balancing value and expense. "With restoration benefits and a no-claims bonus, you can reach an aggregate cover of ₹30 lakh within two-three years. Anything above that may be overkill in terms of value," he added.