300-fold rise in unlimited health cover adoption in two years: Study | Personal Finance

The so-called “unlimited” health insurance cover is moving from a niche offering to the mainstream as medical inflation pushes more Indians to opt for higher financial protection instead of conventional fixed-sum policies.

The trend suggests that consumers are increasingly worried that traditional health insurance covers may not be enough to meet the cost of modern medical treatment, particularly for serious illnesses that require multiple hospitalisations or expensive procedures.

Why are more people choosing unlimited health cover?

Healthcare costs in India have risen sharply in recent years, with hospital bills for complex treatments often running into several lakhs of rupees. Even policies with sums insured of Rs 10 lakh or Rs 20 lakh can get exhausted after prolonged treatment.

Unlimited SI plans are designed to address this concern by allowing policyholders to claim beyond a predefined cover amount, subject to the policy’s terms and conditions. As awareness has improved, many buyers appear willing to pay a higher premium in return for greater financial certainty.

According to Policybazaar, several factors are driving this shift:

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  Rising medical inflation
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  Growing incidence of lifestyle diseases
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  Better awareness of comprehensive health insurance
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  Easier comparison through digital insurance platforms
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  Continued product innovation by insurers

The data also indicates that consumers are no longer gradually increasing their cover from Rs 5 lakh to Rs 10 lakh or Rs 20 lakh. Instead, many are directly opting for very high or unlimited protection when purchasing a policy. 

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Younger Indians are leading the shift

Millennials accounted for nearly 57 per cent of Unlimited SI purchases in FY27, while Gen Z contributed more than 30 per cent. Together, people below the age of 45 represented almost nine out of every 10 buyers.

The data suggests younger Indians increasingly see health insurance as an essential part of long-term financial planning rather than a product to be purchased later in life.

Tier-II and Tier-III cities emerge as growth centres

Another notable trend is that demand is no longer concentrated in metropolitan cities.

Tier-I cities accounted for just over one-third of Unlimited SI purchases in FY27, down from more than half in FY25. Meanwhile:

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  Tier-II cities increased their share from 17 per cent to 25 per cent.
• 
  Tier-III cities contributed nearly 42 per cent of all purchases in FY27.

The numbers show that comprehensive health insurance is becoming more popular beyond major urban centres as awareness improves and digital access to insurance products expands.

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  Among individual cities, Surat recorded the highest increase in average ticket size, followed by Hyderabad and Mangalore. NCR, Bengaluru and Pune also reported healthy growth.
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  Non-Resident Indians (NRIs) and first-time buyers are also opting for bigger cover
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  The trend is not limited to domestic customers.

Policybazaar’s data shows that more than one in three NRIs purchasing health insurance now choose Unlimited SI plans, compared with virtually none in FY25. The company attributes this to growing efforts by NRIs to secure better financial protection for parents and families living in India.

Individual policies continue to dominate

Adoption has grown across both individual and family floater plans.

Policybazaar’s figures show Unlimited SI adoption reached over 18 per cent among individual policy buyers in FY27, compared with nearly 13 per cent for family floater policies.

Customers purchasing these plans are also increasingly adding extra protection. Around 90 per cent opted for consumables cover to reduce out-of-pocket expenses on items such as gloves, masks and syringes, while about 70 per cent selected Day-1 coverage benefits wherever available.

What should buyers keep in mind?

While unlimited health insurance can provide significantly higher financial protection, experts say buyers should not assume every policy offers identical benefits.

Before purchasing, policyholders should carefully check:

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  The policy’s definition of “unlimited” coverage.
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  Waiting periods for pre-existing illnesses.
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  Room rent and treatment-related restrictions.
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  Co-payment clauses, if any.
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  Network hospitals and claim settlement features.
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  Premium affordability over the long term.
• 
  Industry sees a broader change in consumer behaviour

According to Singhal, Indians are increasingly recognising that conventional health insurance may not be sufficient to keep pace with medical inflation. He added that demand is no longer limited to metropolitan areas, with strong uptake from Tier-II and Tier-III cities, younger buyers, first-time customers and NRIs. The growing preference for add-ons such as consumables cover and Day-1 benefits also indicates that buyers are looking for comprehensive protection that minimises out-of-pocket healthcare expenses.