Is Health Insurance Worth the Investment? A Complete Guid
Written by Dev Sethia
3 min read | Updated on December 09, 2025, 17:58 IST
Healthcare costs in India have skyrocketed over the last decade, with even a simple admission to the hospital becoming expensive. From tests to surgeries, bills run into thousands of rupees, or even lakhs of rupees.
The rapid increase in costs for healthcare is contributing to the financial pressures on families, particularly families that are relying solely on savings as their source for healthcare.
As this occurs, health insurance, for many families, is a financial coverage to help alleviate some of the costs associated with healthcare. Industry insiders say that the question is, Is health insurance worth it? It is more relevant now than ever.
For the everyday family, being able to understand how health insurance can help: reduce out-of-pocket health costs, reduce stress when costly healthcare situations arise, and provide long-term financial peace of mind, can help navigate options.
What Health Insurance Usually Covers?
An average health insurance coverage covers a broad range of medical expenses to assist during planned or emergency treatments. Typical coverage includes:
Hospitalisation Expenses
Room rent, ICU charges, nursing, and other prime hospital services.
Pre and Post- Post-Hospitalisation
Diagnostic tests and treatments performed 30-90 days before and post-hospitalisation.
Daycare Treatment
Medical treatments that do not require an overnight stay.
Domiciliary Treatment
Treatment at home when hospitalisation is not feasible.
Emergency Ambulance Service
Transportation expenses by ambulance in emergencies.
AYUSH Treatment
Many plans include Ayurveda, Yoga, Unani, Siddha, and Homoeopathy.
Tax Benefit Under Section 80D
Health insurance not only provides medical coverage but is also a real tax saver. Taxpayers are allowed under Section 80D of the Income Tax Act to claim a deduction on their health insurance premiums in the following ways:
- ₹25,000 for premiums paid for self, spouse, and dependent children.
- An additional ₹25,000 is allowed for parents. If those parents are senior citizens, the limit increases to ₹50,000.
- Preventive health check-ups are covered up to ₹5,000 and included in the limits above.
These tax deductions reduce taxable income, reducing annual taxes owed. For families trying to determine if health insurance is worth it, the tax savings are also an encouragement to buy health insurance.
Why Is Health Insurance Worth It?
Here are the top 4 reasons why health insurance is important:
Healthcare inflation is rising: Across the country, citizens are experiencing rising healthcare inflation and medical treatment is simply becoming more expensive than ever without insurance.
- Tax benefits
With health insurance, you receive additional savings as a year-end tax benefit.
- Cashless hospitalisation
Cashless hospitalisation ensures expedient, stress-free treatment if treatment is needed in an emergency situation.
- Customisable plans
Insurance plans can be tailored to individuals, families and senior citizens with different healthcare needs.
Life With vs. Without Insurance
Imagine a standard middle-class family caught unaware by a sudden medical crisis. Without coverage, it may cost ₹5–10 lakh for major surgery, or hospitalisation related to an injury after a significant car accident.
One you have paid for entirely out of pocket is a sum of money that you had allocated for a child's education, a new house, or retirement.
But you can look at another family, who is paying an annual premium of maybe ₹10,000–₹20,000 to be able to treat you in an entirely cashless fashion, maybe even taking extra amounts as a tax deduction, not to mention having sudden shocks on a medical basis covered.
This is one of those situations that helps illustrate why financial planners think health insurance should be a principle for modern economic planning.
With the increase in lifestyle-related diseases and rising medical expenses, health insurance has moved beyond discretionary or optional expenditure and into the world of necessary financial investment.
A comprehensive health insurance policy provides not only protection against medical emergencies but also contributes to long-term financial well-being with tax advantages.
About Author
Dev Sethia
Sub-Editor
a journalism post-graduate from ACJ-Bloomberg with over three years of experience covering financial and business stories. At Upstox, he writes on capital markets and personal finance, with a keen focus on the stock market, companies, and multimedia reporting. When he’s not writing, you’ll find him on the cricket pitch
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Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.