Your portfolio has changed over the years. Has your health insurance?

Many people do not review their policy for years after purchasing it. They continue to rely on the same coverage amount they deemed adequate at age 30 or 35, even as they reach 40 or 45. Meanwhile, their income, responsibilities, and lifestyle have changed, but their health insurance has not.

This oversight can prove costliest

At first glance, this may not seem like a major issue. After all, investments can also cover medical expenses. But therein lies the biggest misconception.

Health insurance and investments serve distinct purposes. The objective of investing is long-term wealth creation, whereas the purpose of health insurance is to protect that wealth from sudden, substantial medical expenses.

If medical costs exceed the insurance coverage, the balance often has to be drawn from savings, mutual funds, stocks, or other investments. This means that money earmarked for retirement, children’s education, or other major goals could end up being spent on a medical emergency.

That is why financial planners view investments and health insurance not as alternatives to each other, but as complements.

Why is health insurance review often overlooked?

The primary reason lies in people’s perspective. Investment performance is visible daily; one can easily track mutual fund NAVs, stock market movements, and portfolio values. Consequently, people regularly review their investments.

In contrast, health insurance is a financial product whose importance is truly felt only when hospitalization or a claim becomes necessary. Until such a situation arises, most people do not even bother to check if their existing coverage is adequate for their current needs. This is why many people continue with the same health insurance policy for years without making any changes.

Siddharth Singhal, Head of Health Insurance at Policybazaar, says, “Health insurance should be viewed as financial protection, not a one-time purchase. If a medical emergency today costs substantially more than what your policy covers, the gap has to be funded from your savings or investments. That can derail long-term financial goals that took years to build. As your income, lifestyle, and responsibilities evolve, your health insurance should evolve with them. Building wealth and protecting it must go hand in hand.”

Similarly, Vineet Gupta, Head – Product Development at ManipalCigna Health Insurance, notes that while the growth in investments is clearly visible to people, the true value of health insurance becomes apparent only when a claim is required. This is why it often falls off people’s priority list.

According to the company’s ‘India Health Quotient 2026’ report, only 12% of policyholders review their health insurance policies more than once a year. The survey also revealed that a large number of people still lack clear information on how to choose the right health insurance.

The consequence is that while people’s income, investments, and responsibilities grow over time, their health coverage remains stagnant at the old level. Consequently, if medical expenses rise, one may have to pay the difference between the insurance payout and the actual cost out of pocket.

Rising medical expenses have changed the math

If you purchased health insurance five or seven years ago, it wouldn’t be right to assume that the same coverage would be sufficient today. This is due to the ever-increasing cost of treatment. A medical condition or surgery that might have cost a few lakh rupees a few years ago may cost much more today.

This is why simply having a policy isn’t enough. It’s also important that the sum insured is adequate for current times. If medical expenses exceed the insurance limit, the remaining amount has to be withdrawn from your own pocket or investments. This can impact financial planning developed over the years.

Venkatesh Naidu, CEO at BajajCapital Insurance Broking Ltd, says, “The first thing I’d suggest is to stop treating health insurance as a one-time purchase. Many people buy a policy in their thirties and then don’t look at it again for years. Meanwhile, healthcare costs keep rising. Medical inflation in India is growing at roughly 12–14% every year, so a cover that looked adequate five or six years ago may no longer be enough today.”

He further says, “A simple way to start is by asking yourself whether your cover reflects today’s treatment costs, not yesterday’s. Procedures that once cost ₹3 lakh can now easily cost ₹5–6 lakh in many cities. If your policy hasn’t changed while healthcare costs have, chances are you’re underinsured.”

This also indicates that health insurance should be evaluated not only at the time of policy purchase, but also in light of changing medical costs over time. Just looking at the sum insured is not enough. Policy terms, such as room rent limit, illness sub-limit and co-payment conditions, may also impact the actual protection available at the time of claim.

When should you review your health insurance?

Most people only pay attention to health insurance when faced with hospitalization. However, financial planners believe there are specific milestones when one should review their coverage, even in the absence of a medical emergency.

For instance, family responsibilities increase after marriage. The potential cost of medical treatment may rise with the arrival of children. If you include your parents in your health plan, your existing coverage might prove insufficient. Similarly, a rise in income, moving to a big city, or a family history of serious illnesses makes it essential to re-evaluate your health insurance.

Siddharth Singhal, Head of Health Insurance at Policybazaar, says, “Beyond the annual review, certain milestones should automatically prompt you to reassess your coverage—getting married, starting a family, moving to a city with higher healthcare costs, a significant jump in income, or taking on greater financial responsibilities. These are all indicators that your protection needs may have increased.”

Meanwhile, Vineet Gupta, Head – Product Development at ManipalCigna Health Insurance, notes that it is not always necessary to replace the entire policy at every life stage. A better approach is to strengthen existing coverage based on specific needs. For example, if you are planning to get married, it is wise to opt for a policy with maternity benefits well in advance so that the waiting period can be completed. As your family grows, you might consider additional protection; similarly, if there is a risk of lifestyle diseases, you could look into appropriate coverage or wellness features related to them.

Just as life changes rapidly, so do your protection needs. Therefore, updating your health insurance periodically—much like an investment—is a sound financial habit.

How to determine if your current health cover is adequate?

A single health insurance coverage amount cannot be right for everyone; it depends on factors such as your income, city of residence, family size, age, and health risks. However, there are a few simple questions that can help you decide whether it is time to review your existing coverage.

If your income has risen significantly over the past few years but your health insurance sum insured has remained unchanged, it may be time to re-evaluate. Similarly, if you have added new family members, included your parents in the policy, or live in a city with high medical costs, your old coverage might no longer be sufficient.

Focusing solely on the sum insured is not enough. It is crucial to check for conditions such as room rent limits, sub-limits on specific illnesses, and whether the network of cashless hospitals meets your needs. You should also periodically check the market for new plans that offer better benefits at lower premiums. If necessary, you can also consider the option of porting your policy.

Venkatesh Naidu, CEO of BajajCapital Insurance Broking Ltd, says, “I also encourage people to look beyond the headline sum insured. Details like room rent limits, co-payment clauses, or disease-specific caps can significantly reduce the protection you actually receive at the time of a claim. Those are the things many people only discover when they’re already in the hospital.”

Meanwhile, according to Vineet Gupta, Head – Product Development at ManipalCigna Health Insurance, there is no fixed formula to determine the exact coverage amount suitable for everyone. However, generally speaking, an individual cover of at least ₹10 lakh—adjusted for family income, city, and family size—can be considered adequate protection. If needed, one can opt for ‘super top-up’ plans or other alternatives that help mitigate the impact of rising medical inflation over time.

Summing up…

People often invest a great deal of time and effort into growing their investments. However, people often do not pay enough attention to the health insurance that safeguards that investment—even though the two serve different purposes: one builds wealth, while the other protects it.

If your salary, investments, and financial goals have changed over the past few years, it is likely time to review your health insurance as well. After all, a robust portfolio is only meaningful if you are equally well-prepared to protect it against a medical emergency.

Disclaimer: The health insurance cover suitable for an individual depends on factors such as age, income, city of residence, family size, existing health conditions, and financial responsibilities. The suggestions in this article are general in nature and should not be considered as personalised financial or insurance advice. Readers should carefully evaluate policy features, exclusions, waiting periods, and consult a qualified financial or insurance advisor before purchasing or upgrading a health insurance policy.

Every financial journey has a turning point. What’s yours?

Financial Express is launching a new series highlighting real experiences with money, investments, and the taxman. Did a sudden tax rule catch you off guard? Did a piece of financial advice change your life? Your story could provide invaluable, practical lessons for thousands of fellow taxpayers. Share your experience with us. We respect your privacy: no stories will be featured without a direct conversation and your full consent. Thank you.