Kamal Ghorui
MUMBAI: More than half of young Indians, in the age group 24 to 34, who buy health insurance drop out within the first three years, exposing a structural weakness in policy retention.According to a Niva Bupa health insurance survey, 55% of policyholders in the age group who let policies lapse do so within three years of purchase, indicating that early adoption is often tentative and lacks long-term commitment. This high churn suggests that buying decisions are frequently driven by short-term triggers rather than a sustained understanding of risk protection.Health insurance premiums grew 9.1% to Rs 1.2 lakh crore in FY25; however, the number of lives covered rose only 1.4% to 58 crore.
“What is even more telling is that most of them are not moving from one insurer to another. They are actually leaving the category altogether,” said Nimish Agarwal of Niva Bupa.Affordability is the most cited cause of lapsation with 46% of those who discontinued citing it as a cause. The pressure is amplified by competing financial obligations: 66% of lapsers had active loans, including 33% with personal loans and 17% with home loans.In such cases, insurance premiums are among the first expenses to be cut when budgets tighten. Unlike life insurance policies, which are purchased for a level premium, health insurance policies are annual contracts and prices increase with age. For insurers, roping in young people is crucial to spread risk and keep the business viable as claims increase with age.A significant share of young policyholders disengage because they do not perceive value in the product.
