Medical Inflation and Your Health Cover

Medical costs tend to rise faster than everyday prices, but nobody can tell you the exact rate for your treatment, your city and your year. FinResp's tools use 14% a year as a planning assumption. It is a number we chose to plan with, not one we measured, and the sums below show it at three rates so you can see how much the rate matters.

What a treatment that costs ₹1 lakh today would cost later:

• After 1 year: ₹1.10 lakh at 10%, ₹1.14 lakh at 14%, ₹1.18 lakh at 18%

• After 2 years: ₹1.21 lakh at 10%, ₹1.30 lakh at 14%, ₹1.39 lakh at 18%

• After 5 years: ₹1.61 lakh at 10%, ₹1.93 lakh at 14%, ₹2.29 lakh at 18%

• After 10 years: ₹2.59 lakh at 10%, ₹3.71 lakh at 14%, ₹5.23 lakh at 18%

Turn it around: a ₹5 lakh cover buys less and less. In 10 years it buys what ₹1.93 lakh buys today if costs grow 10% a year, ₹1.35 lakh at 14%, and ₹0.96 lakh at 18%.

Review the sum insured at every renewal. The sums above are the reason. A cover that felt generous when you bought it can feel thin later.

Look at what the plan adds by itself. 119 of the 335 plans on FinResp list a cumulative bonus, which raises the sum insured when you do not claim. How much it adds, and whether it is capped or can reduce after a claim, differs by plan, so read the exact wording.

Consider a top-up. A top-up raises your cover above what you already hold. Compare it on its own terms, including its waiting periods and what it deducts first.

Some plans charge a co-payment depending on the city where you are treated. On FinResp, 32 of 335 plans carry a zone-based co-payment: 12 from ICICI Lombard, 11 from National Insurance, 3 each from Bajaj and Go Digit, 2 from Tata AIG and 1 from United India.

Here is how one ICICI Lombard plan, MaxProtect Classic, words it. The co-payment is 0%, 8% or 16%, and it applies when treatment is taken in a higher-tier zone than the zone the premium was paid for. Zone A includes Delhi, Mumbai and Ahmedabad. Zone B includes Pune, Kolkata, Hyderabad, Bangalore and Chennai. Zone C is the rest of India. There is no co-payment if you are treated in your own zone or a lower-tier one.

Other insurers set their zones and percentages differently, so read the zone list and the percentages in your own policy before you rely on cover in a city other than your own.

It does not say medical inflation is exactly 14%. That is our planning assumption, and the sums show what other rates would do. It does not compare premiums between cities, because we do not hold a source for that. The plan counts above are from the plan data on this site, read from each plan's own wording, and plans change, so check your policy before you decide.

This is information, not advice.