A recent study conducted by ICICI Lombard on health insurance trends has revealed that the primary reason for purchasing health insurance among consumers is not tax benefits, but rather the desire for adequate coverage for health-related needs. According to the study, conducted to analyze consumer behavior in the health insurance market, the top reason cited for buying health insurance is the availability of cashless claims, followed by the protection of savings and the management of inflated medical costs.
The study found that only 30% of consumers identified tax exemptions or rebates as one of the top reasons for purchasing health insurance, indicating that tax benefits are not the main driving force behind most consumers’ decisions. Interestingly, the survey also highlighted that women, especially with the increasing female working population, are more likely to purchase health insurance for tax exemptions in the coming year.
Sheena Kapoor, Head of Marketing, Corporate Communications & CSR at ICICI Lombard, commented on the findings, stating, “It is evident that while tax benefits play a role, they are not the driving force behind the decision to invest in health insurance. What truly resonates with our customers is the assurance and security provided by health insurance, surpassing mere fiscal advantages.”
Regarding the optimal premium amount for an individual health insurance policy, the survey revealed that 63% of respondents consider an annual premium ranging from Rs 8,000 to Rs 30,000 as optimal. Interestingly, individuals in the 36-55 age bracket are willing to spend more on premiums, with over half of them stating a range of Rs 10,000 to Rs 30,000 as optimal.
The study also highlighted the prevalence of insurance as the most common financial investment among consumers, followed by fixed deposits and mutual funds. Among those who have made tax-saving investments, 84% have health cover, 72% own life insurance, and 64% invest in fixed deposits.
Age and life stage were identified as critical factors influencing financial investments, with the 26-45 age group being the most active in investing across various financial tools, particularly health and life insurance.
Regarding sources of information on tax-saving investments, the study found that friends or family and bank relationship managers are the key sources for more than 6 in 10 consumers. However, the younger age group (21-35 years) shows a greater reliance on self-awareness via knowledge in the public domain.
Despite the increasing understanding of health insurance as a protective tool, the study revealed that only 54% of consumers are fully aware of how they can save tax by investing in health insurance.
Looking ahead, the study found that close to 98% of existing health insurance owners expressed their likelihood to renew next year, with 72% intending to purchase health insurance for the first time or increase their coverage in the coming year.
