A Stitch in Time: The high price of delaying health insurance

In India, health insurance is often seen as discretionary, a later concern or something provided by one’s employer. Image: Shutterstock

Let us start with the story of Rajeev, a senior lawyer at a prestigious law firm in India. His employer’s health insurance was remarkably generous. He had a 100 percent coverage with no co-payments for medical costs up to ₹1.5 crores. When he was diagnosed with stage-1 lung cancer at 49, his treatment was fully covered, and he went into remission, moving towards full recovery. His illness prompted him to consider beginning a shift toward a less demanding life outside the firm, but he ran straight into an unexpected barrier. No private insurer would cover him post-illness, and those willing to take him on excluded all cancer-related treatments, while charging an exorbitant premium. This was a scenario Rajeev had not considered in his financial planning: the chilling prospect of financing his future healthcare out of his pocket.

This situation is far from rare. In India, health insurance is often seen as discretionary, a later concern or something provided by one’s employer. Premiums are often viewed as wasted if no claim is made, as health insurance is frequently evaluated through the lens of investment rather than risk transfer. Very few consider and understand the threat that, without health insurance, a single serious illness or accident can erase years of hard-earned actual investments and savings in a matter of weeks, if not days. As Zerodha co-founder Nithin Kamath remarked in 2024, “Most Indians are just one hospitalisation away from bankruptcy”. It is not hyperbole; it is a harsh and often ignored reality.

Why Buying Early Matters More Than You Think

The best time to buy health insurance is when you are young, healthy and least likely to need it. Premiums are priced based on risk, so a 25-year-old without medical issues will pay far less and face fewer exclusions than a 45-year-old with hypertension or diabetes. Further, health insurance policies impose a waiting period (typically two to four years) before they begin covering pre-existing conditions. In addition, certain illnesses may be permanently excluded if they are diagnosed before the policy is purchased. This means that the more you delay buying insurance, the higher the risk that the very illnesses you are most vulnerable to will never be covered. Acting early ensures that you serve out the waiting periods while you are still healthy, so that when you truly need support, your policy will protect you. In short, a timely decision today can save you from heavy financial and emotional stress tomorrow.

Rationalising Costs When You’re Young and Healthy

In your twenties or early thirties, the annual premium for a solid individual policy can be less than the cost of a weekend getaway or a Saturday night out to a fancy restaurant. It may feel like a waste if you don’t end up making a claim. But skipping insurance just because you don’t use it often is a misunderstanding of what insurance is really for. This is the very nature of insurance: you make small premium payments regularly so that when a large expense arises, the policy is there to protect you. Paying ₹5,000 annually for a ₹5 lakh cover means you are buying protection worth one hundred times your premium. This is a feature which no investment product can match. Premiums paid also qualify for tax benefits under Section 80D of the Indian Income Tax Act. 

Also read: Mitigating risks for India's doctors with comprehensive insurance coverage