Most of the recent conversations around Bima Sugam, the Irdai-backed one-stop digital insurance marketplace, have focused on access—simpler purchases, standardised products, and possibly lower costs through zero-commission policies. If executed well, this could reduce the friction in buying and managing insurance.
But for households dealing with ageing parents, this addresses only one part of the financial reality. The more relevant question is not whether insurance is easier to buy, but whether it meaningfully covers the full cost of ageing.
India is already at an inflection point. According to the Longitudinal Ageing Study of India (LASI), about 12% of today’s population is elderly, and this is projected to rise sharply to 319 million by 2050. This is not a marginal demographic shift. It is a structural change that will influence how families plan, spend and allocate resources over time.
Meanwhile, health insurance has become a central part of household finance. The Insurance Regulatory and Development Authority of India (Irdai) reports that insurers settled 32.6 million health insurance claims amounting to ₹94,248 crore in 2024-25. The average claim size was ₹28,910. Also, health insurance is now the largest segment within non-life insurance, accounting for over 40% of premiums.
However, these numbers also highlight a limitation. An average claim size under ₹30,000 reveals that insurance typically covers isolated medical incidents rather than the ongoing expenses of aging. Also, a family’s financial burden often extends beyond the hospital stay, as a significant portion of elderly care costs remains outside the scope of insurance.
These include post-discharge care, home attendants, diagnostic monitoring, physiotherapy, medication adherence, and periodic medical supervision. For families in which parents live alone or in another city, there are additional costs such as emergency travel, local coordination, and trusted on-ground support. These are not one-time expenses. They are recurring, uneven, and often unplanned. Insurance, by design, is not structured to absorb most of these costs.
Coverage-protection gap
There are also early signals that even within hospitalisation, coverage may not always translate into full financial protection. Data shows that while health insurance claims rose by over 21% in 2024-25, the total amount settled grew more slowly, at about 12.9%, pointing to a widening gap between claims and payouts. This suggests higher utilisation, rising treatment costs, and the possibility of partial settlements, all of which affect household cash flows.
Premiums, especially for senior citizens, have seen sharp increases in recent years, reflecting underlying medical inflation and claim trends. Taken together, the direction is clear. Insurance is expanding, but so is the financial exposure around ageing. This is where household financial planning hasn’t fully caught up. Most families continue to treat elderly care costs as part of their emergency fund. This approach works when costs are occasional and unpredictable, but ageing is neither.
A new reality
Insights from eldercare providers suggest that families are starting to recognise this shift. A growing share of demand is coming from families where the children live outside India, which makes structured planning for care (not just crisis response) even more important. In such cases, the cost isn’t just financial; it’s also logistical and managerial.
This raises a set of practical questions.
Should ageing parents now be treated as a separate category within household financial planning, similar to education or retirement?
If insurance primarily addresses hospitalisation, how should recurring care costs be accounted for?
At what age (mid-40s, early 50s) does this change from a distant consideration to an active budgeting priority?
There are no standard answers yet. But the direction of change is visible. As platforms such as Bima Sugam improve access, they will likely increase insurance adoption and simplify policy management. That is necessary. But it does not eliminate the deeper financial reality of ageing.
For many households, the next shift may not be about buying better insurance, but about recognising that insurance is only one layer of a larger, ongoing cost structure. The sooner that distinction becomes a part of financial planning, the more predictable and manageable the economics of ageing will become.
Prashanth Reddy is founder & managing director, Anvayaa, an elder care platform.