Dr Dhiraj, in DifferentTruths.com, exposes health-insurance mis-selling, guiding buyers to read policies, question promises, and protect futures.

By now, in this series, we have discussed what health insurance is, how to choose a policy, how claims work, and why claims sometimes get rejected. But there is another uncomfortable reality that deserves equal attention. Sometimes the problem is not the claim. Sometimes the problem begins much earlier—when the policy itself is sold.

Health insurance is often bought at emotional moments. A friend gets hospitalised. A relative faces a major surgery. A bank executive calls near the end of the financial year. Someone says, “Take this quickly; everything is covered.” And in that urgency, many people buy protection without fully understanding what they are actually buying. This is where mis-selling begins.

Recent concerns from the insurance sector show that complaints related to unfair business practices and mis-selling continue to remain significant. Complaints classified under unfair business practices reportedly rose to over 26,000 in FY2024–25, with the regulator itself acknowledging mis-selling as an important issue in the sector.

Interestingly, the industry itself has become increasingly aware of this problem. In fact, some insurance advisory platforms and fintech companies have started making “no mis-selling” part of their identity and marketing message. Certain advertisements and promotional campaigns openly emphasise that they do not merely sell policies but help customers understand them.

‘Everything is Covered’ is a Myth

Perhaps the most dangerous sentence in insurance is: “Everything is covered.” No health insurance policy works that way. Every policy has conditions. There are waiting periods, exclusions, room rent clauses, co-payments, deductibles, sub-limits, and documentation requirements. Yet many buyers discover these only during hospitalisation. Consider a simple example. A family buys a ₹10 lakh policy believing it offers complete protection. During treatment, they realise that maternity expenses have waiting periods, room rent limits apply, and certain consumables are excluded. The disappointment is not because insurance failed. It is because expectations were created incorrectly. Health insurance problems often begin with oversimplified promises.

Buying Only on Premium

Imagine two policies. One costs ₹14,000 annually, and another costs ₹19,000. Many buyers naturally move toward the cheaper option. At first glance, it appears financially sensible. But later, they discover that the lower-priced policy includes co-payment clauses, lower room eligibility, restricted hospital networks, or narrower coverage. The extra ₹5,000 saved at purchase may eventually result in ₹50,000–₹1 lakh of additional expense during treatment.

Insurance is one area where the cheapest option may become the most expensive decision. A policy should be compared not only by premium but also by usability.

Agent’s Words versus Policy Document

Another common mistake is relying entirely on verbal assurances. People remember conversations. Insurance works through documents. Statements such as “You can claim immediately”, “This disease is fully covered,” or “You can stop after two years” may sound reassuring, but if they do not appear in policy wording, they may have little value later. This does not mean agents are dishonest. Many are highly professional. But health insurance is a legal contract. The policy document always carries more weight than a verbal explanation. A useful habit is simple: before buying, ask the same question in writing through email or official communication. Written clarity today prevents conflict tomorrow.

The Underinsurance Problem

Mis-selling is not always about wrong information. Sometimes it is about insufficient protection. A ₹3 lakh cover purchased ten years ago may have felt adequate at that time. Today, even moderate procedures in private hospitals can consume a significant portion of that amount. India’s healthcare costs have been rising steadily, and insurance complaints related to claims and settlement issues have also increased. Recent grievance data indicate a substantial rise in health and general insurance complaints in recent years. Medical inflation quietly reduces the strength of old policies. Many people continue renewing the same cover for years without asking whether it still matches present-day costs.

The Corporate Insurance Trap

This is especially common among salaried individuals. An employee receives employer health cover and assumes personal insurance is unnecessary. The arrangement has worked well for years. Then a job change, career break, retirement, or company restructuring happens. Suddenly, the protection disappears. The problem becomes more serious if medical conditions have developed over time because buying fresh insurance later may involve higher premiums, waiting periods, or restrictions. Corporate insurance is useful. But depending entirely on it can create long-term vulnerability.

Buying Insurance Too Late

Health insurance is one of the few products that becomes harder to buy as you grow older. At age thirty, the insurer sees one risk profile. At age fifty-five, with diabetes, hypertension, or previous treatment history, the picture changes. Premiums increase. Medical checks become more detailed. Waiting periods matter more. Ironically, many people buy health insurance only after the first major medical scare. That is usually the stage when insurance becomes most expensive. The best time to buy health insurance is often when it feels unnecessary.

Renewing Without Reading

Many policyholders renew automatically every year. Premium paid. SMS received. Process completed. But policies evolve. Terms may change. Coverage structures may be updated. Limits, exclusions, or benefits may shift over time. Reading the renewal document may not feel exciting, but ignoring it can create unpleasant surprises later. Health insurance should be reviewed periodically—not forgotten.

Digital Platforms and Comparisons

Technology has made insurance easier to access. Today, a buyer can compare dozens of policies in minutes. But there is a hidden problem. More information does not always mean better understanding. Comparison websites often show premium, cover amount, and broad features. The deeper details—waiting periods, room limits, claim procedures, restoration benefits, portability conditions—require further reading. Insurance purchased in five minutes may create consequences lasting fifteen years. Convenience should not replace understanding.

Frauds in the System

Mis-selling is different from fraud, but both affect consumers. In recent years, fake calls claiming to represent regulators, refund agents, or grievance officers have increased. There have even been cases where fraudsters posed as insurance officials and targeted policyholders. If someone asks for money to release insurance refunds, promises guaranteed approvals, or claims to “fix” rejected policies for payment, caution is necessary. Regulators and grievance systems do not operate through unofficial payment requests.

What Careful Buyers Should Do

People who avoid insurance problems often follow surprisingly simple habits. They buy earlier rather than later. They read major conditions. They ask questions in writing. They review coverage periodically. They separate sales language from policy language. Most importantly, they remember one thing – Health insurance is not purchased for today. It is purchased for a future version of ourselves who may be frightened, stressed, and financially vulnerable. That future person deserves better preparation.

Closing Thought

Health insurance mistakes rarely look dangerous when they are made. Skipping one clause. Ignoring one exclusion. Delaying one decision and trusting one quick explanation. But years later, during a hospital stay, those small choices can become expensive. Because in insurance, the cost of misunderstanding is rarely paid at the time of purchase—it is paid at the time of need.

In the next column, we will move deeper into a difficult but increasingly relevant area: health insurance fraud, fake claims, hospital abuse, and how ordinary policyholders can protect themselves in a changing insurance environment. Recent trends in complaints and grievances show that consumer awareness is becoming just as important as insurance itself.

Picture design by Anumita Roy

Dr. Dhiraj Sharma

Dr Dhiraj Sharma, faculty in Management Studies at Punjabi University, Patiala, writes at the intersection of economy, finance, governance, culture, literature, and social change. His interdisciplinary work examines how individuals and institutions adapt to economic and societal shifts. Beyond academia, he pursues creative writing—fiction, non-fiction, poetry—and excels as an avid birder, nature/wildlife photographer, and painter in realistic/semi-impressionist styles. He actively supports government/NGO initiatives for bird watching, butterfly monitoring, and natural habitat conservation. He is our Associate Editor: Economy, Finance and Governance.