Insurance companies in India pay only about 70% of treatment costs in cancer care, study

Insurance companies now generally pay only about 70% of claims related to cancer treatments, causing patients to pay out of pocket at least Rs 4-5 lakhs, as in brain cancer. Even a health insurance cover of Rs 5-Rs.10 lakhs policy is not adequate nowadays in cancer care, says a data-driven investigation into cancer care.

Insure-tech company Plum's 'Cost of Cancer report', based on analysing 8,102 insurance claims across multiple insurers, says that in just three years, claim deductions have surged by 58%. The average payout ratio is down to 70.8%, meaning nearly a third of every hospital bill has to be paid out-of-pocket. (The study said that while insurance companies released Rs 78 crore for treatments, the patients had to pay from their pockets Rs 23.2 crore). For instance, a patient with brain cancer, even with a ₹10 lakh policy, may end up paying ₹4–5 lakh themselves due to exclusions on modern drugs and treatment sub-limits.

The study says 1 in 4.7 patients exceed their ₹5 lakhs insurance limit. While 39.5% of cancer patients stay within ₹1.25 lakh in treatment costs, a significant portion—21.4%—exceed ₹5 lakhs, pushing them beyond their typical sum insured coverage and into catastrophic financial territory.

''In the Indian context, where a typical household saves about ₹1,00,000 a year, patients in higher intensity tiers face a median treatment cost of ₹7.6 lakh — effectively erasing 7–13 years of household savings, and in extreme cases, up to 20 years'', says Saurabh Arora, Co-Founder & CTO, Plum.

The report points to systemic flaws in policy design: exclusions on off-label drugs (common in modern cancer care), 50% sub-limits on oral chemotherapy and advanced treatments, and restrictive clauses such as room rent caps, waiting periods, and mandatory co-pays. The cancers that require the highest treatment costs often receive the lowest payout percentages, forcing patients to bear significant out-of-pocket expenses.

New cancer drugs with US FDA approval may still be considered 'off-label' in India. Many standard plans exclude or limit coverage for these drugs, making this the most common reason for claim rejections. Modern treatments like oral chemotherapy are subject to a 50% sub-limit. Even when covered, insurers only pay half the cost. Multiple exclusionary clauses reduce coverage: pre-existing condition waiting periods, room rent capping, co-payments (10-20% of claims), and exclusion of 'experimental' procedures, even if they're standard treatments, observes the study.

The study says early detection of cancer has increased by 72% over the last three years. Among malignant cancers, breast cancer stands out as the leading type, followed by blood cancers, colorectal cancer and lung cancer. Some cancers, like testicular cancer, concentrate in young adults, while prostate cancer only appears after age 50. Blood cancers (leukemia, lymphoma) and brain cancer consistently push the highest percentage of patients into the ₹10L+ cost bracket. Liver and pancreatic cancers also show heavy concentration in higher cost brackets.

Colorectal, brain, and stomach cancers are the most financially intensive, while stomach and ovarian cancers require the most frequent medical engagement.  Blood and lymph cancers demand heavy hospitalisation, while breast and stomach cancers rely on daycare chemotherapy. Brain cancers stand apart for their diagnostic complexity, requiring substantially more imaging and testing than other malignancies. These patterns reveal that cancer treatment isn't uniform—each type follows distinct pathways shaped by where the disease occurs and what interventions work best.