Health insurance claims rise sharply with age as critical illnesses drive costs; claims nearly 2.7 times higher among seniors: Report

Health insurance claim costs rise sharply with age, with the average claim amount increasing from ₹65,124 among individuals below 25 years to ₹1.77 lakh among those above 60, according to the latest report by Policybazaar. This represents an increase of nearly 2.7 times and reflects a significant shift in the nature and cost of illnesses across age groups.

Younger policyholders are more likely to require treatment for infections, injuries, and maternity-related care while older consumers increasingly undergo treatment for cardiac diseases, cancer, kidney disorders, and other chronic conditions that often require specialised procedures and longer hospital stays. While senior citizens account for a smaller proportion of claims, they contribute disproportionately to overall payouts because of the higher cost of treatment.

Cancer, heart disease account for 22% of claims

The analysis highlights a growing gap between illnesses that drive hospitalisation volumes and those that account for healthcare expenditure. Routine illnesses continue to generate a large number of claims, but chronic and critical diseases carry a disproportionately higher financial burden because of their complexity, specialised treatment requirements and longer recovery periods.

Cancer & Tumours accounted for the largest share of healthcare expenditure at 12%, followed by Heart Disease, Hypertension & Stroke at 10%. Together, the two disease categories accounted for 22% of health insurance claims during the study period.

Women’s health claims also point to a financial burden extending well beyond maternity. Breast cancer alone accounted for nearly ₹99 crore in health insurance claims, with the average claim amount standing at ₹7.5 lakh.

Pregnancy and childbirth remained among the most common reasons for women to use health insurance, reflecting significant utilisation during the reproductive years. However, critical illnesses now account for a larger financial burden. Reproductive health disorders contributed 29% of claims, underscoring the need for financial protection across different stages of women’s lives.

Metro healthcare costs significantly higher

Healthcare costs also vary considerably across India’s urban centres. The average hospitalisation claim in Tier-1 cities is 44% higher than in Tier-3 cities, driven by differences in treatment costs, access to super-speciality hospitals, and the greater adoption of advanced medical procedures.

The findings suggest that consumers in large metropolitan areas may need higher levels of health insurance coverage as treatment costs continue to outpace those in smaller cities.

The composition of hospital bills further shows where expenses are concentrated. Across cancer, cardiac and orthopaedic treatments, surgical procedures account for the largest share of hospital expenses, while medicines, diagnostics and consumables make up another significant portion.

Medical inflation adds to financial pressure

Cancer treatment recorded the steepest increase in average claim size between 2021 and 2026, rising from ₹3.1 lakh to ₹5.6 lakh. Average claims for Heart Disease, Hypertension & Stroke increased from ₹1.4 lakh to more than ₹2 lakh while claims for Bone, Joint & Muscle Disorders rose from ₹1.6 lakh to ₹2.3 lakh.

The sustained increase across these major disease categories indicates that medical inflation continues to add to the financial burden of critical illnesses, affecting both patients and insurers. The trend also highlights the importance of periodically reviewing health insurance coverage as treatment costs rise.

Working-age population drives claim volumes

Contrary to the perception that health insurance is primarily used by senior citizens, individuals aged 26 to 45 accounted for more than 56% of all health insurance claims processed through the Policybazaar ecosystem.

Claims among this group are driven by maternity-related hospitalisations, accidental injuries, planned surgeries and lifestyle-related illnesses. The finding is significant as this is also the stage when individuals are building careers, raising families and managing substantial financial commitments.

Siddharth Singhal, Head of Health Insurance at Policybazaar, said rising healthcare costs are being driven by both the increasing incidence of complex illnesses and the growing cost intensity of treatment.

“As medical advancements enable more sophisticated interventions and improve outcomes, the financial implications of healthcare are also becoming more significant for individuals and families,” Singhal said. He added that adequate health insurance is increasingly important for financial resilience, with the industry needing to focus on wider awareness, deeper penetration and more comprehensive protection across different stages of life.