1. Why a single number isn't enough
Most people buy health insurance based on a rough guess — "₹5L sounds enough" or "my employer gives ₹3L". But your real requirement depends on five factors that compound:
- Age: Older members claim more often and more expensively.
- City: Metro treatment costs 30%–50% more.
- Family size: More members means more claims.
- Health risks: Pre-existing conditions and family history raise claim probability.
- Medical inflation: The silent killer — your cover shrinks every year in real terms.
This calculator combines all five to produce a realistic, personalised requirement — then compares it against what you already have.
2. The base cover: ₹5L–₹10L per person
A reasonable starting point is ₹5L–₹10L per person, adjusted by age:
| Age group | Base cover per person |
|---|---|
| Under 30 | ₹5L – ₹7L |
| 30–40 | ₹7L – ₹10L |
| 40–50 | ₹10L – ₹15L |
| 50–60 | ₹15L – ₹20L |
| 60+ | ₹20L – ₹30L |
These numbers reflect the higher likelihood and higher cost of treatment as you age. A single bypass surgery at 55 can cost ₹6L–₹8L. At 40 it might cost ₹4L–₹5L. Age matters.
3. Medical inflation — the most underrated factor
Medical inflation in India runs at 10%–14% per year — significantly higher than general inflation. This means:
Effective cover after N years = Current cover ÷ (1 + inflation rate)^N
A ₹10L cover at 12% medical inflation becomes:
| Years from now | Real value of ₹10L cover |
|---|---|
| 0 (today) | ₹10.0L |
| 5 | ₹5.7L |
| 10 | ₹3.2L |
| 15 | ₹1.8L |
| 20 | ₹1.0L |
In other words, a ₹10L cover today will only cover ₹3.2L worth of treatment in 10 years. This is why you should either buy significantly more cover than you need today, or choose a policy with a strong no-claim bonus that increases your sum insured each year.
⚠️ Medical inflation is the biggest reason people find their cover inadequate at the worst possible moment. Plan for it — don't ignore it.
4. City tier multiplies the requirement
Treatment costs vary significantly across India. A rough cost index:
| City tier | Cost index | Multiplier |
|---|---|---|
| Metro | 1.35× | +35% |
| Tier 1 | 1.15× | +15% |
| Tier 2 | 1.00× | Baseline |
| Tier 3 | 0.85× | −15% |
A metro family of four needs roughly 35% more cover than an identical tier-2 family. This can mean the difference between ₹20L and ₹27L.
5. Family size — sub-linear scaling
More members means more claims, but the increase isn't linear. Roughly:
| Family size | Family factor |
|---|---|
| 1 person | 1.00× |
| 2 people | 1.40× |
| 3 people | 1.75× |
| 4 people | 2.00× |
| 5 people | 2.25× |
| 6+ people | 2.50×+ |
Why sub-linear? Because not every family member will claim in the same year. The risk is shared, so you need proportionally less than the sum of individual requirements.
6. Health and lifestyle factors
These push your cover need higher:
- Pre-existing conditions: +25% — higher chance of complications and repeat hospitalisation.
- Family history of critical illness: +20% — genetic risk factors suggest higher cover.
- High-risk lifestyle: +15% — smoking, heavy drinking, high-stress work.
- Elderly parents on the policy: +35% — parents claim more frequently.
These factors don't mean you can't get insurance — they mean you should prioritise having more cover, not less. Insurers may also apply loadings on your premium, but the cover amount is what protects you.
7. The role of liquid savings
Your health insurance doesn't have to cover 100% of your requirement. Liquid savings (cash, savings accounts, easily accessible investments) can act as a buffer for smaller claims and non-covered expenses.
A reasonable approach:
- Insurance: Covers the large, catastrophic claims.
- Emergency fund: Covers the small claims, deductibles, and non-covered items.
So your effective protection = insurance cover + liquid savings. The calculator factors this in.
✓ Insurance for the big risks, savings for the small ones. Together they give you complete protection.
8. A worked example
Take a 38-year-old in Bangalore (metro) with a spouse (35) and two children (8, 5). No pre-existing conditions, no family history, non-smokers.
| Step | Value |
|---|---|
| Base cover (age 38) | ₹10.0L |
| × Family factor (4 members) | × 2.00 |
| × City factor (metro) | × 1.35 |
| × Health factor | × 1.00 |
| Raw requirement | ₹27.0L |
| Recommended cover (rounded) | ₹27L – ₹30L |
With employer cover of ₹5L and liquid savings of ₹3L, total existing protection = ₹8L. The gap is ₹22L.
Recommended structure:
- Personal base policy: ₹10L
- Super top-up: ₹20L (with ₹10L deductible)
- Total effective cover: ₹30L
- Estimated annual cost: ₹22,000–₹28,000
This base + top-up structure is significantly cheaper than a single ₹30L policy — usually 40%–50% less.
9. Review your requirement regularly
Your health cover requirement changes as your life does. Re-evaluate:
- Every 2–3 years to account for medical inflation.
- When you add a family member (marriage, child).
- When you move cities.
- When a family member develops a health condition.
- When your income increases — you can afford more cover.
- When you approach retirement — medical needs rise sharply.
The worst outcome is discovering mid-emergency that your cover is far too small. Regular reviews prevent that — and they're free.
10. Final thoughts
Your health insurance requirement isn't a fixed number — it's a function of your age, city, family, health, and the relentless rise of medical costs. Getting it wrong in either direction has consequences: too little cover leaves you exposed; too much wastes premium.
Use this calculator to find your real number. Then build a structure — base policy plus super top-up, and a healthy emergency fund — that gets you there cost-effectively. Review it every couple of years, and you'll never be caught underinsured.
