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Why is Public Awareness of Health Insurance a Must In India ?

Published On Dec 31, 2019, Updated On Dec 09, 2020

India may have ranked in a higher position in 2019 when it comes to rocket science, technology and health care research.

But, getting a health insurance policy for Indians is still not mandatory.

Despite the fact that health insurance should be the first step of all financial plans, a large section of the population is still not aware of health care insurance.

Kicking off such a crucial aspect of health care is apparently what contributes to high death rates and critical medical debt that the nation is grappling with.

In fact, the lack of health insurance awareness among people is one of the hurdles in the penetration of the country’s health sector industry.

Although the healthcare industry ranks among the fastest-growing industries in the country, health insurance keeps pace at a slow speed.

Various types of health insurance products are available online in the country, such as:

  • Individual health insurance plans
  • Family floater health insurance plans
  • Senior citizens health insurance policies
  • Critical illness insurance plans
  • Health insurances, especially for women, newborn, etc.
  • Some specific health insurance for vector born diseases
  • Single disease health insurance products, etc.

The sad part is that insurance companies are unable to tap a major chunk of the population. This is what putting the lives of millions at risk.  

Do you think development in medical science is helping people avail of specialized treatment in rural areas?

The answer sadly is ‘NO.’

This is what prompts us to raise public awareness of health insurance policies in India.

Read below to know the factors that promote public awareness program related to health insurance in India.

Only 27% of the People are Covered

If we go by the joint report of KPMG and FICCI, we find that only 27% of the people have health insurance in India. The number is undoubtedly very low in comparison to our mammoth population.

The gap is alarming and astonishing. Astonishing because on the one hand, we are claiming to pace up with other countries when it comes to the private and public healthcare sector. On the other hand, medical costs are escalating rapidly and are on a continuous rise.

Dependency on Corporate Plans

The dependency on the corporate health insurance plan that does not provide coverage for major or critical illnesses is another reason. The result is that the majority of people are reluctant to personal health cover.

Illiteracy  & Lack of Awareness

Illiteracy & Lack of Awareness are other causes. We can understand this by understanding insurance penetration and insurance density.

With the IRDAI annual report, we have tried to figure out where we stand as a country in terms of Insurance Penetration and Insurance Density. In general,

Insurance Penetration and Insurance Density are the two benchmarks that signify consumption and awareness of insurance in a particular geographical area.

  • Insurance Penetration: It is calculated as a first-year new business premium to GDP, i.e. the percentage of the insurance premium to GDP. Currently, Insurance Penetration is one of the lowest at 3.69% in India.
  • Insurance Density: It is the ratio of premium in a given year to the total population. The insurance density in India was $59.7 in 2016 (life 46.5 and general 13.2), as per the government and industry data.

There is a huge difference in insurance penetration and density in India compared to countries like the US and the UK.

Insurance Penetration and Insurance Density - A Proportional to the Literacy Rate

A very closer study has found that insurance penetration and insurance density are somewhat proportional to the literacy rate.

Let me prove,

  • India ranks among countries with the lowest general insurance penetration and density. And we have a comparatively lower literacy rate - just 73%.
  • US and UK have a 99.0% literacy rate, so they have higher insurance penetration rates.

Similarly, Delhi with one of the highest literacy rates boasts of the highest penetration. In contrast, Bihar with the lowest literacy rate of 63.82% has the lowest insurance density. This means the higher the literacy rate, the higher the penetration rates.

Also, read How You Can Reap Tax Benefits Under Medical Insurance Plans?

It’s not wrong to say that educated people are well aware of health insurance - its needs and benefits.

So, the need for health insurance awareness programs and proper education should be the priority in villages and remote areas where literacy rate is low. Several initiatives should be taken with objectives to tell people the importance of health insurance and build the trust and credibility of insurance companies among them.

Listed below are highlights of such public awareness programs:

  • Optimal coverage: Let people know about the optimal coverage offered by health insurance.
  • Cashless treatment: Let people know about cashless treatment. Make them understand that they will be treated without spending even a single rupee in world-class hospitals.
  • Financial cushion: People should be taught that health insurance policies act as much needed financial support in case of medical emergencies. It saves them from getting stuck in financial stress.
  • Helpful during medical inflation: The medical costs are increasing, and it will keep increasing. Let customers know that it is only health insurance plans that enable them to get better treatment without spending from their own pocket.
  • Increased life risks: In today’s world, we’re at a higher risk of breaking our health and being hospitalized. Getting a health cover can solve this problem.
  • Lump-sum payment: Make people aware that a lump sum amount is paid to the insured or nominee in case the insured person is diagnosed with a critical illness, like cancer, heart attack, stroke, etc.
  • Worldwide cover: It’s also necessary to explain people about the worldwide coverage benefits under some policies.
  • Types of Health Policies: Spreading knowledge about the coverage provided in different types of health insurance plans is another area of concern to lure people to buy health insurance. Enlighten them about the monetary and maternity benefits offered in a health insurance cover.
  • Clarifying doubts: Health insurance is a subject matter of discretion. Let people know that they should not buy any plan blindly. Instead, they ask questions and clarify all their doubts from the insurance agent before choosing a plan.
  • Terminologies & parameters: It is essential to equip potential policy buyers with terminologies and parameters such as claim settlement ratio (CSR), incurred claims ratio (ICR), Solvency Ratio and so forth. These factors will help them distinguish between various players.
  • Optional benefits: In the awareness program, focusing on optional benefits such as add-on cover, riders along with general inclusions is necessary. Also, exclusions should not be ignored.
  • Healthy lifestyle: Letting buyers know that if they live a healthy lifestyle or buy a policy at a young age, it can lead them to lower premium rates.
  • Use of technology: We should increase customer awareness and engagement through mailers, videos, radio YouTube, etc.

Insurer’s Responsibility

Besides including the above topics in public awareness programs, there are also great roles of insurance companies. Every insurer should be committed to building trust among people by paying quality services and approving claims without delay. They should be focused on real-time engagement with customers through their website. They must give a prompt reply to queries to motivate people to buy health insurance.

Bottom Line

No doubt, we are witnessing an unbelievable economic and development growth. But, it is a long way to go to achieve health goals. Making people aware of health insurance and allowing customized policies available to them will be a turning point.

After all, effort never goes waste. We must be committed to promoting public awareness of health insurance in India. We can do this by organizing campaigns in suburban locations, villages and cities, explaining why health insurance is important to cope up with the increasing health care challenges in our country.

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