Health insurance renewals in India have reached record-high persistency levels in FY26, according to a new analysis from Policybazaar, an online insurance marketplace. This surge in renewals reflects a significant shift in consumer attitudes towards health insurance, driven by evolving product offerings and an increasing awareness of health risks.
Key Trends Behind the Surge in Health Insurance Persistency
Modular Health Plans: The rise of modular health insurance plans with features such as cumulative bonuses is one of the biggest drivers of high renewal persistency. These plans offer the advantage of automatic cover growth each year, regardless of claims, making them especially attractive to long-term policyholders. The increasing popularity of flexible riders, which enhance the base coverage, has also contributed to the trend.
Growing Lifestyle Diseases: The rising incidence of lifestyle diseases is another factor that has heightened the importance of having long-term health insurance coverage. As people face increasing health risks due to factors like poor diet, sedentary lifestyles, and stress, they are becoming more committed to retaining their health policies.
Cost-Effective Family Floater and High-Sum Insured Policies: There has also been a growing preference for family floater plans and high-sum insured policies, which offer more comprehensive protection at relatively lower premiums. This shift toward policies that provide larger coverage amounts and cover more family members has contributed to the increasing retention rates.
Insights from the Policybazaar Report
Persistency Ratios: The number of policies (NOP) persistency has increased by 400 basis points (4%), while gross written premium (GWP) persistency has improved even more, climbing by nearly 700 basis points (7%). These figures indicate that consumers are more inclined to retain their existing policies rather than switch insurers or drop coverage altogether.
Upgrading Policies: Rather than simply renewing their policies, many consumers are upgrading their health insurance coverage by adding riders and opting for higher sum insured amounts. This reflects an increasing recognition of health insurance as an asset rather than a mere obligation. Customers are viewing health insurance as a long-term investment that grows over time and provides greater financial protection.
The Appeal of Modular Products
Modular health insurance plans have proven to be especially appealing because of the cumulative bonuses they offer. For instance, in some plans, the sum insured can grow up to 10 times over the years, with a premium increase of just 10-15%. This offers substantial long-term protection while lowering the effective cost per lakh of coverage.
For example, a policyholder paying a ₹33,000 premium in 2025 may get a ₹10 lakh cover. By 2030, with a similar premium, the coverage could increase to ₹70 lakh, drastically reducing the cost per ₹5 lakh of coverage, making the policy much more affordable over time.
Popular Add-On Riders
As policyholders approach their health insurance renewals, many are also opting for add-on riders to enhance their coverage. Some of the most popular riders include:
Consumables Cover: This rider covers medical items like gloves, syringes, and other consumables that are typically not included in base policies.
Critical Illness Benefit: An increasingly sought-after rider, this provides additional coverage for major illnesses such as cancer, heart disease, and more.
Daily Cash Allowance: This benefit provides policyholders with a daily cash allowance to cover incidental costs during hospitalization.
Bonus Covers: Bonus covers continue to be the most frequently attached rider during policy renewals, offering additional protection without significant premium hikes.
Conclusion
The health insurance market in India is seeing a major shift in consumer behavior, with more people holding on to their policies for longer periods and even enhancing their coverage with riders. Modular, feature-rich health plans, coupled with the growing prevalence of lifestyle diseases, are key factors driving record-high renewal persistency rates. With the rising popularity of family floater and high-sum insured policies, the Indian health insurance market is increasingly evolving into a long-term, asset-based model of protection, helping both policyholders and insurers navigate the complexities of healthcare costs.
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