Most individuals are faced with the same dilemma when they are selecting insurance. Would you concentrate on maintaining the premium at a low level, or would you concentrate on increasing the amount of coverage? At first sight, a low premium is a clever financial move. It saves money annually and can be easily accommodated in monthly budgets. Coverage is, however, abstract until the time when you need it.
The fact is that neither premium nor coverage can be considered individually. The key is to get the balance between what you are spending today and what you should have tomorrow. Knowledge about the reasons why individuals are making poor coverage decisions, how the premiums are determined and when coverage needs to be increased is useful in preventing expensive errors in the future.
The wrong approach – 90% of people make this mistake
What is the first thing you look for when searching for a health plan? If you said a low premium, you’ve made the same mistake most people do. People often find their insurance plan based on its affordability. Once they have found it, only then do they look at what the plan covers, with most of them choosing the most basic plan.
Answer this - when you’re in a restaurant, do you first look at the price of a dish or do you choose a dish that’s appetising and then check if it fits your budget?
The same logic can apply to choosing a suitable health insurance plan. It’s important to first check if it covers all your needs, even if it means paying a little bit more premium.
The coverage amount of your health insurance plan is what makes or breaks your choice. The right cover will cater to all financial and medical needs, and help in case of any emergency. Less expensive does not mean a better deal.
Coverage Amount – How much do you need?
If you couldn’t already tell, your health insurance coverage is the most essential factor in choosing the right plan. Your coverage amount ensures that all your medical needs are taken care of at any given point.
So, do you know how much cover you need?
No need to crack your head trying to figure that out, we’ve developed the SahiCover Calculator to help you accurately understand just how much health insurance cover you will require.
You must be wondering – “Why do I need a calculator for this? I can just do it myself.” That’s a very valid point, but the problem is that most people often neglect the actual amount of coverage they need and don’t know how to estimate the gap.
Coverage Calculator – Sahi Cover, Discover
There are many calculators that help calculate the amount of premium you would require to pay for your plan. But in the sector of health insurance, calculators to help identify your cover are scarce.
As an industry breakthrough, our SahiCover Calculator is a revolutionary tool to help you choose the right cover for all your needs. It takes into account all aspects of your current lifestyle, from your health habits, exercise frequency, smoking/drinking habits, and your age to your family history and location. We’ll accurately analyse everything before suggesting the best coverage amount for you.
Follow the right approach, calculate your coverage amount and choose the plan that suits you best.
So, what are you waiting for?
Sahi cover, discover!
Why People Choose the Wrong Coverage
Many insurance buyers select coverage based on convenience rather than need. This often leads to underinsurance.
One common reason is premium-first thinking. People start by asking, “How much can I afford to pay every month?” instead of asking, “How much protection do I need?” This approach almost always results in lower coverage.
Another issue is over-reliance on employer-provided insurance. While workplace health plans are helpful, they may not be sufficient for serious medical situations or long hospital stays. They are also tied to employment, which can change.
There is also a lack of awareness about healthcare inflation. Medical costs rise faster than general living expenses. A coverage amount that seemed adequate five years ago may fall short today.
Finally, people often underestimate risk. Good health today does not guarantee low medical expenses tomorrow. Accidents, sudden illnesses, and lifestyle-related conditions are unpredictable.
Wrong coverage choices usually come from short-term thinking rather than long-term planning.
How to Calculate the Right Coverage (Practical Formula)
Choosing the right coverage does not have to be guesswork. A simple, practical approach helps estimate a realistic number.
Start with hospitalisation costs in your city. Treatment expenses vary significantly depending on location, hospital type, and room category. Research average costs for common procedures.
Next, factor in family size and age. A single individual needs less coverage than a family with children or elderly parents. Older members increase the likelihood of hospitalisation.
Add a buffer for medical inflation. A safe approach is to assume medical costs may double over the next decade.
A basic practical method looks like this:
- Estimatethe cost of one major hospitalisation
- Multiply by the number of family members
- Add 30–40% buffer for inflation and complications
For example:
- Estimated hospitalisation cost: ₹5 lakh
- Family members: 3
- Base requirement: ₹15 lakh
- Buffer added: ₹5–6 lakh
This leads to a coverage requirement of around ₹20 lakh.
Coverage should protect against worst-case scenarios, not just routine expenses.
Key Factors That Determine Your Premium
Premiums are not random numbers. Insurers calculate them using several risk-related factors.
- Age plays a major role. Younger individuals generally pay lower premiums because their risk of claims is lower.
- Medical history affects pricing. Pre-existing conditions, past surgeries, or chronic illnesses may increase premiums or lead to waiting periods.
- The sum insured directly impacts the premium cost. Higher coverage usually means a higher premium, though the increase is not always proportional.
- Lifestyle habits such as smoking or excessive alcohol consumption may result in higher premiums due to increased health risks.
- Policy features also matter. Add-ons, lower deductibles, and fewer restrictions increase premium costs.
Understanding these factors helps you see why two people of the same age may pay very different premiums.
High Coverage Doesn’t Always Mean High Premium
A common misconception is that high coverage automatically means unaffordable premiums. In reality, the difference between moderate and high coverage is often smaller than expected.
Insurance pricing works on risk pooling. Once basic risks are covered, increasing the sum insured does not double the insurer’s risk in the same proportion. As a result, the premium jump from ₹10 lakh to ₹20 lakh coverage may be relatively modest.
Buying higher coverage at a younger age is also more cost-effective. Premiums are lower, and you lock in better protection early. Waiting until health issues appear often results in higher costs and coverage restrictions.
Choosing higher coverage early can actually be a smarter financial move than upgrading later.
Why Cheap Premium Plans Can Be Risky
Low-premium plans look attractive, especially when budgets are tight. However, they often come with hidden trade-offs.
Such plans may have lower coverage limits, which get exhausted quickly during hospitalisation. They may also include sub-limits on room rent, procedures, or doctor fees, leading to out-of-pocket expenses.
Another issue is higher deductibles or co-payments. You may be required to pay a significant portion of the bill yourself before the insurer contributes.
Some low-cost plans also have longer waiting periods for pre-existing conditions or specific treatments, delaying access to benefits.
A cheap premium saves money only if you never need the coverage. In real-life claim situations, these plans can create financial stress instead of relief.
When Should You Increase Your Coverage?
Coverage is not a one-time decision. It should evolve with your life.
You should consider increasing coverage after major life events such as marriage or the birth of a child. More dependents mean higher healthcare responsibility.
A change in location is another trigger. Moving to a metro city usually increases treatment costs significantly.
Coverage should also be reviewed as you age. Health risks increase over time, making higher coverage more relevant.
If your income has increased, upgrading coverage becomes easier and more sustainable. Higher income allows you to afford better protection without straining your budget.
Regular reviews ensure your coverage stays aligned with real-world needs.
Common Mistakes to Avoid
Many insurance buyers repeat the same mistakes, often without realising it.
One major mistake is choosing based only on the premium. Affordability matters, but protection matters more.
Another is ignoring policy details such as exclusions, sub-limits, and waiting periods. These details decide how useful the policy is during a claim.
Some people delay buying adequate coverage, assuming they will upgrade later. Delays often result in higher premiums or medical restrictions.
Relying solely on employer insurance is another risk. Job changes or layoffs can leave you without sufficient coverage when you need it most.
Avoiding these mistakes requires planning, not urgency-driven decisions.
FAQs
What is more important — premium or coverage?
Coverage is more important than premium. The primary purpose of insurance is protection. A premium should be affordable, but coverage should be sufficient to handle major financial risks. The right balance matters, but coverage should never be compromised for marginal savings.
How much health insurance coverage should a family have?
The ideal coverage depends on family size, age, and location. Many families opt for coverage between ₹15–25 lakh, especially in cities with high medical costs. The goal is to cover at least one major hospitalisation for all members.
Does a lower premium mean lower benefits?
Often, yes. Lower premiums may come with reduced coverage, higher deductibles, sub-limits, or longer waiting periods. Always review policy terms to understand what is being traded off for the lower cost.
How do insurers calculate premiums?
Insurers calculate premiums based on age, health status, lifestyle habits, sum insured, policy features, and risk history. These factors help assess the likelihood and cost of future claims.
Is increasing coverage later more expensive?
Yes, increasing coverage later is usually more expensive. Premiums rise with age, and health changes may lead to higher costs or coverage restrictions. Buying adequate coverage early is generally more cost-effective.
