The great senior health cost dilemma: pay up or save up?

Rising premiums are forcing seniors to choose—insurance plans or medical emergency fund

- Aprajita Sharma

Mumbai-based Sarita Aggarwal, 62, has had an ₹8 lakh health policy from a national insurer for nearly two decades. But in recent years, the annual premium has shot up—from ₹25,000 in 2022 to ₹35,000 in 2023, and then ₹52,500 in 2024. She's bracing for yet another hike in 2025.

She has been considering discontinuing the policy and building a medical emergency fund instead. "Even as I am paying such a huge premium, I had to sue my insurer thrice to get my claim settled. I won twice. Damned if you do and damned if you don't," she says. Yet, she suspects she'll keep renewing it, because there's no alternative.

Thane-based Sameer Deshpande, 58, took a different path. After early retirement, he converted his employer-provided insurance into a private plan covering himself, his wife, and son. When the insurer hiked the premium from ₹18,000 to ₹35,000 in just a year—owing to his age slab change—he dropped himself from the policy.

"I was uncomfortable with this hike. I decided to exclude myself from the policy and renewed it only for my wife and son which cost me ₹21,000. I feel it's smarter to pay cash on demand than to shell out ever rising premiums for uncertain coverage," said Deshpande.

Insurance vs investment
Rising premiums are forcing many seniors to reconsider the value of insurance versus building a medical emergency corpus.

"Hospitalisation is an uncertain event—difficult to quantify the medical bill and just how many times one may get hospitalised. Insurance will surely offer better risk protection against medical corpus, but if the premium amount becomes more than 33% of the total coverage, it is wise to look for alternatives," said Kumar.