Kunal’s uncle paid his health insurance premiums for decades.

But during COVID, when serious complications from his diabetes struck, his insurance refused to pay a single rupee.

Today, the health insurance industry in India is booming. In FY25, it was worth over 1.2 lakh crore rupees.

Premiums are rising but so are complaints.

So how does health insurance really work? And what can you do to protect yourself?

Tune in to the latest episode of The Signal Brief where you’ll hear from consumers and experts.

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TRANSCRIPT:

Kudrat (Host): It’s a humid afternoon in a private hospital in South Delhi. A big, well-known hospital in the heart of the capital.

Kunal’s uncle has already passed away.

He was in his early sixties. Diabetes. Fatty liver. A slow, silent progression that COVID only made worse.

And for decades he had done the responsible thing: paid his health insurance premiums without fail.

Kunal: So one of my uncles was diagnosed with diabetes and as a result of which he had fatty liver. And the disease progressed unchecked and his condition went from bad to worse very rapidly. And sometime after COVID, he passed and his insurance refused to cover him entirely. He was in his early sixties, if I'm not wrong, and he didn't get a penny.

Kudrat (Host): The bill came to fifty, sixty lakhs. The insurance company said no. Pre-existing condition. Full denial.

So the hospital did what hospitals sometimes do when someone owes them money.

They refused to release the body.

Kunal:  They were not allowing us to take his remains out because there was some dispute over the amount. One, and secondly, since the insurance refused to cover him, they were asking his son to pay the amount upfront and they were just not being understanding. For them it was very mechanical.

And it was very messy. I was at the hospital, I saw how ugly things became with the staff. And I'm talking about Central Delhi, right? South Delhi. It's not even like some tier-two or tier-three town. And that's when I saw the ugly reality that you really need to have this sorted. Like God forbid anybody sees this day where they have to fight with the authorities just to get the remains of your family member taken out of the hospital because there was a big fight. Very ugly, very disturbing.

Kudrat (Host): Kunal’s family eventually got the body released. Kunal’s cousin, his uncle’s son, who worked at an MNC happened to have a solid policy that covered dependents.

But the image stayed with Kunal forever: a family pleading in a hospital corridor while their loved one lay behind a locked door.

Kunal told me he’s had insurance since his early twenties, he knows how important it is, especially with rising prices of healthcare costs.

This whole saga solidified his resolve even more.

Right now, Kunal has one of the best insurance plans out there. And yet… he is worried. He has seen too many cases where even the “best” insurance doesn’t pay out the way it’s supposed to.

Stories like this are becoming disturbingly common in urban India.

Even families who did “everything right” are discovering that health insurance is far more fragile than they imagined.

All of this is coming at a time when India’s health insurance industry is booming. Premium collections, for example, crossed Rs 1.2 lakh crore in FY25.

And, so are complaints. From delayed approvals to rejected claims, policyholders say getting insurance is often a lot easier than actually using it.

Kudrat (Host): My name is Kudrat Wadhwa and you’re listening to The Signal Brief. We don’t do hot takes. Instead we bring you deep dives into the how and why of consumer trends.

In today’s episode: why health insurance matters, and the exact framework you need to choose the best policy for you and your family.

Kudrat (Host): Let’s go back twenty years.

Imagine a typical middle-class family. Someone falls seriously ill. The choices are now brutal.

You could go to a government hospital and face endless queues, overcrowded wards, and often inadequate facilities.

Or you could rush to a private hospital that offered better care and quicker treatment, but at a cost that could wipe out a lifetime of savings.

Without insurance, families used to sell jewellery, mortgage land, or borrow from relatives at crushing interest rates, or worst of all, sometimes they gave up on proper treatment.

Monika Halan: An average Indian lived to the age of 32 in 1947. Today, that number is 72.

Kudrat (Host): That was personal finance expert Monika Halan, one of India’s most trusted voices on insurance, author of Let’s Talk Money, and a member of IRDAI’s advisory committees.

Monika Halan: So obviously, better healthcare, better medical facilities, and the ability to pay to get them has played a very large role, other than diet and hygiene and all of the other things. But just the fact that medicine has made giant strides and we've now got the ability to pay for it, either out of pocket and then post the liberalisation of the financial sector with products like health insurance coming in to help us pay for these typically surgeries and other more serious events which land you in a hospital.

Kudrat (Host): The modern story of health insurance in India really began after economic liberalisation. When private companies entered the space in the early 2000s.

For the poorest families, the government later launched the Ayushman Bharat scheme, the world’s largest public health insurance programme.

Kudrat (Host): Today, private health insurance, which is what we’re focusing on in this episode, is no longer optional.

Medical costs are rising 10-14% every year. More of us are facing chronic illnesses like diabetes, heart disease, and cancer. Post-COVID awareness has also pushed people to buy cover.

Buying health insurance has become one of the most important financial decisions you make for your family, right after buying a house or planning retirement.

But even if you have health insurance, the truth is that it may not work the way you imagine.

Many insurers advertise claim settlement ratios of 98% or even 99%. Yet stories like that of Kunal’s uncle’s are surprisingly common.

Families scrambling to arrange cash while a patient is still inside the ICU. Endless paperwork during moments of panic. Claims reduced over technicalities nobody understood while buying the policy.

This brings me to the heart of the episode–the part most people only discover when it’s too late.

The machine behind why so many claims fail.

Health insurance companies rarely reject claims in one dramatic moment.

Rather, the system wears people down slowly.

Through waiting periods. Definitions buried deep inside policy documents. Technical exclusions. And small decisions made during emergencies that suddenly become very expensive later.

Take pre-existing diseases.

If you have diabetes, hypertension, or certain illnesses before buying the policy, insurers can limit or reject related claims for years. And if those conditions were not properly disclosed, sometimes because the buyer didn’t understand, sometimes because the agent rushed the process, the insurer can reject the entire claim.

Then there’s room rent capping, one of the biggest traps in Indian health insurance.

Imagine this: Your policy allows a Rs 5,000 hospital room.

But during an emergency, your family takes out a Rs 9,000 room because it’s the only bed available.

Now the insurer may not just cut the room payout. It can proportionately reduce everything else too: the surgery bill, doctor fees, medicines, even ICU-related costs.

One panicked decision inside a hospital corridor can suddenly shrink the entire claim.

And then comes the paperwork.

Patients and consumer advocates often complain that TPAs, the third-party administrators hired to process claims, repeatedly ask for additional documents, clarifications, signatures, and approvals. A missing form. A coding discrepancy. A disputed charge. Tiny technical details can delay payments for days or weeks.

Meanwhile, the hospital wants its money.

And in that moment, sick, exhausted, emotionally overwhelmed families are forced into negotiations they barely understand.

Monika Halan: See, it's a power game. As an individual, you have no power. The insurance company has its lawyers, the hospital has its own setup, the TPA has its organisation. You are approaching this as an individual. You have no power of bargaining.

Health insurance is a very complicated product to buy in India, unfortunately, because the disclosures haven't been made keeping the understanding of the policyholder in mind. The disclosures are made keeping regulatory checkbox.

So what you have to really think about first is not to lie on the form. Ideally, you should get a good medical test so that any pre-existing condition is documented by the insurance company's own medical expert.

Kudrat (Host): So how do you protect yourself against this machine?

You stop approaching it as a powerless individual. You build your defence carefully.

As Monika said, start with a proper medical examination before buying your policy so every pre-existing condition is clearly documented and accepted.

Choose a high sum insured, at least Rs 15-25 lakh as base cover in big cities, plus a super top-up plan. Look specifically for policies with no room rent capping and restoration or refill benefit.

Work only with a trusted advisor, someone recommended by friends or family who has a track record of actually helping during claims. Buy from companies and platforms known for fewer complaints. Read the full policy document, not just the marketing brochure. And review your policy every single year.

Kudrat (Host): Still, even with the best policy, there remain some big structural problems in Indian health insurance.

One of the most common complaints is what’s not covered.

I spoke to Dr. Misba, she’s a dentist based in Bengaluru.

Dr. Misba: It's quite a sad situation here in India, to be honest, especially as a dentist because what I've realized is dental insurance is just something that's starting off now. Companies don't cover it, they don't cover eyes and they don't cover teeth, which is so surprising to me because these are two organs we use a lot. So because of this, I feel like the general population here in India hesitates to come into a dentist because anything in healthcare is quite expensive and especially in dentistry now, it's something that's gonna be in your mouth. You want it to last a few years. So the materials themselves are expensive. So the treatment costs for the general public are quite high. And because there's absolutely no insurance, a lot of people just opt not to get it treated and kind of live with these dental diseases, which is so sad.

Kudrat (Host): Dr. Misba also shared that patients often take out their frustration on doctors.

Dr. Misba:  Of course, they're frustrated and sometimes it's taken out on the wrong person.

They're blaming us for costs being high. They're like, “Why isn't this covered by insurance?” I'm just a doctor, you know, I'm not the one making these rules. I'm just trying to do my treatment for you and help you out. And I really have no say in whether it's covered by insurance or not. But then who do they question? They come and they question the doctors.

Kudrat (Host): And yet, despite all these gaps and problems, we have some things to be grateful for. Here’s financial expert Monika again.

Monika Halan:  So it is in no country's perfect look. And after all of the criticism that I can make of everything about India, if you need a doctor here, you get a doctor.

You try falling ill in Canada or Europe or the US. There's no doctor free for three weeks. Even if you have a hairline fracture, they say, “Can you come after six weeks?” This is Canada, UK. So yeah, yes, there is market failure in all kinds of ways and all kinds of countries, but here, you know, also we have a community which will help out in the sense friends and families will pitch in if there's a problem.

At least you can get medical care in India and you can get it at every price point, from the cheapest charity hospital to a super five-star facility with robotics or whatever, right? So I think we should... I will immediately now, when you start comparing me to other countries, say that, “I'm so glad that I'm here in India.” Yes, there's market failure in health insurance, but at least I can get the doctor and the facilities for treatment for a surgery. You can't get it at short notice in more so-called $60,000 per capita income countries. So yeah, every country has a problem. I think we have a lower problem.

Kudrat (Host): So yes, Indian health insurance has its flaws.

It doesn’t cover everything. Claims can be stressful. Premiums are rising.

But the alternative, having no cover at all, is far riskier.

The good news is that with the right knowledge and a little effort, you can significantly improve your chances of being properly protected when you need it most.

Outro: That's all for today. You just heard The Signal Brief. We don't do hot takes. Instead, we bring you deep dives into the how and why of consumer trends. The Core produces The Signal Brief. Follow us wherever you get your favourite podcasts.

To check out the rest of our work, go to www.thecore.in.

If you have feedback, we'd love to hear from you. Write to us at feedback@thecore.in or you can write to me personally at kudrat@thecore.in.

Thank you for listening.