A family of four needs about ₹20–25 lakh of health cover: ₹25 lakh in a metro and ₹20 lakh in a smaller city. The usual way to build it is a ₹5–10 lakh family floater plus a super top-up, with a separate policy of ₹10–15 lakh for your parents.
That is the one recommendation on this page. Below I explain where the numbers come from, show exactly how a super top-up pays out with a worked example, and list the IRDAI rules and tax limits you should know before you buy.
The framework: how much cover by city
For two adults and two children, with parents on their own policy:
| Where you would be treated | Base family floater | Super top-up (deductible = base cover) | Total family cover | Separate policy for two parents |
|---|---|---|---|---|
| Tier 1 metro (for example Mumbai, Delhi NCR, Bengaluru) | ₹10 lakh | ₹15 lakh, deductible ₹10 lakh | ₹25 lakh | ₹15 lakh |
| Tier 2 city | ₹5 lakh | ₹15 lakh, deductible ₹5 lakh | ₹20 lakh | ₹15 lakh |
| Tier 3 city or town | ₹5 lakh | ₹15 lakh, deductible ₹5 lakh | ₹20 lakh | ₹10 lakh |
Pick the tier of the hospital you would actually use. If you live in a small town but would go to a metro hospital for anything serious, use the metro row.
These totals line up with FinPlann's health insurance calculator. It starts from ₹5 lakh per adult and ₹3 lakh per child and applies a city multiplier (1.4× for metros, 1.2× for Tier 2, 1.0× for Tier 3). For a family of four that gives a floor of ₹22.4 lakh in a metro, ₹19.2 lakh in Tier 2 and ₹16 lakh in Tier 3; for two parents it gives ₹14 lakh, ₹12 lakh and ₹10 lakh. The table rounds each figure up to the next ₹5 lakh, because sums insured are sold in round amounts and rounding down leaves you short. The base amounts and multipliers are FinPlann's assumptions, not a regulatory norm.
Why these numbers, and why they need reviewing
There is no official index of hospital or claim costs in India. The closest primary measure is the health sub-group of the Consumer Price Index, which covers medicines, doctors' fees and other health spending. It rose from 100 in 2012 to 204.8 in December 2025, about 5.5% a year, and by 3.43% in the year to December 2025 (MoSPI). Insurers and brokers often quote double-digit "medical inflation", but none of them publishes a primary, audited series, so I don't use those figures.
No official series tracks private hospital tariffs on their own, so for sizing cover I use a deliberately higher assumption of 8% a year and check the plan at 10%. That is an assumption, not a statistic. At 8%, a ₹5 lakh hospital bill today becomes about ₹10.8 lakh in 10 years and ₹23 lakh in 20 years. At 10% it becomes about ₹13 lakh in 10 years.
The practical point: ₹25 lakh of cover bought today buys only about ₹11.6 lakh of today's treatment after 10 years at 8%. Review your sum insured every three to five years, and compare quotes for raising each layer; adding to the super top-up is often the simpler step.
How a super top-up works: a worked example
A super top-up is a second policy that pays only after your total claims in a policy year cross a threshold called the deductible. Set the deductible equal to your base cover, so the base pays first and the super top-up pays the rest. A plain top-up looks similar but applies the deductible to each claim separately, which makes a big difference when one family member is hospitalised more than once.
Illustrative example. A metro family has a ₹10 lakh base floater and a ₹15 lakh super top-up with a ₹10 lakh deductible. In one policy year they have three hospitalisations of ₹6 lakh, ₹7 lakh and ₹9 lakh, a total of ₹22 lakh.
| Claim | Base floater pays | Super top-up pays (₹10 lakh aggregate deductible) | Plain top-up would pay (₹10 lakh per-claim deductible) |
|---|---|---|---|
| 1st: ₹6 lakh | ₹6 lakh | Nil (year's total ₹6 lakh, below ₹10 lakh) | Nil |
| 2nd: ₹7 lakh | ₹4 lakh (base now used up) | ₹3 lakh (year's total ₹13 lakh, above ₹10 lakh) | Nil (claim below ₹10 lakh); you pay ₹3 lakh |
| 3rd: ₹9 lakh | Nil | ₹9 lakh | Nil (claim below ₹10 lakh); you pay ₹9 lakh |
| You pay from savings | Nil | Nil (insurers pay ₹10 lakh + ₹12 lakh) | ₹12 lakh |
The super top-up still has ₹3 lakh of its ₹15 lakh left for the rest of the year. With a plain top-up the same family would have paid ₹12 lakh from savings. When you compare quotes, check the policy wording says the deductible is "aggregate" or applies to the policy year, not per claim.
Two practical checks. First, the super top-up and base policy should have similar terms (no room-rent cap, same waiting periods served), or a claim the base pays may be treated differently above the deductible. Second, a super top-up has its own waiting periods, so buy it at the same time as the base policy rather than after a diagnosis.
Where employer cover fits
Treat a group policy from your employer as an extra layer, not the base. It ends when you resign, are laid off or retire, which is often when you most need cover and when a fresh policy with new waiting periods is hardest to get.
If you are leaving a job, IRDAI's May 2024 master circular lets members of a group policy migrate to a retail policy with the same insurer, carrying over credit for waiting periods served. A fresh policy with a different insurer can still mean new waits. Buying your own base floater and super top-up while you are employed and healthy avoids the problem.
Some people use employer cover to absorb the super top-up's deductible. That works while you are employed, but leaves a ₹5–10 lakh gap the day the job ends, so keep a personal base policy as well.
Parents: buy them a separate policy
A floater's premium is set largely by the age of its oldest member, so adding parents in their sixties to your family floater raises the price for everyone and lets one large claim for a parent empty the cover your children rely on. A separate policy of ₹10–15 lakh, per the table above, keeps the two risks apart.
Since 1 April 2024, IRDAI's Insurance Products Regulations require insurers to offer health products for all age groups, so parents in their late sixties or seventies can still buy cover. Expect a pre-existing disease waiting period and read the co-pay clause carefully: a 20% co-pay on a ₹10 lakh bill leaves ₹2 lakh for you to pay.
IRDAI rules that matter when you buy
- Pre-existing disease waiting period: at most 36 months of continuous cover under the Insurance Products Regulations 2024, in force from 1 April 2024. Insurers may offer shorter waits.
- Specific waiting periods (named diseases or treatments such as cataract or joint replacement): also capped at 36 months.
- Moratorium: after 60 continuous months of cover, including time carried over through porting or migration, the insurer cannot contest a policy or claim for non-disclosure or misrepresentation except for established fraud. If you raise the sum insured later, the 60 months run separately on the increase.
- AYUSH treatment: insurers must have a board-approved policy placing AYUSH treatment at par with other treatments. What your plan actually pays depends on its wording; see our guide to AYUSH health insurance cover.
- Cashless speed: the insurer must decide a cashless request within one hour and give final discharge authorisation within three hours (master circular, 29 May 2024).
- No-claim bonus: you choose at renewal between a higher sum insured at no extra premium or a premium discount. The rate is product-specific.
- Portability: when you switch insurers, credit for waiting periods, the moratorium and the no-claim bonus carries over to the extent of the sum insured.
Disclose every condition when you buy. The moratorium protects you after five years, but in the first five years an undisclosed condition gives the insurer grounds to contest a claim.
Policy features worth paying for
| Feature | What to look for | Why |
|---|---|---|
| Room rent | No cap, or "any room" | A cap such as 1% of sum insured per day can lead the insurer to cut other charges in proportion if you take a costlier room. |
| Co-pay | None for members under 60 | Co-pay makes you pay a fixed share of every claim. |
| Disease sub-limits | None | A sub-limit on cataract, cardiac or cancer treatment caps the claim below your sum insured. |
| Restoration | Restores cover after it is used up in a year | Useful for a floater, where two members can claim in the same year. |
| Network hospitals | Your preferred hospitals are on the cashless list | Cashless saves you arranging lakhs at admission. |
AYUSH treatment cover
AYUSH covers Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy. Most health policies pay for AYUSH in-patient treatment, but often on narrower terms than people assume.
What IRDAI requires
IRDAI's AYUSH guidelines of 31 January 2024, effective 1 April 2024, asked insurers to treat AYUSH at par with other treatments, and to set quality standards and a process for adding AYUSH hospitals and day-care centres to their cashless networks. The May 2024 master circular carries this forward. Insurers must make available products, add-ons or riders that cover all systems of treatment, including AYUSH, and each insurer's board-approved underwriting policy must place AYUSH treatments at par with the others.
"At par" is a principle for product design. It is not a rule that every policy pays AYUSH bills up to the full sum insured. Some policies do; others still apply a separate AYUSH limit.
What is usually covered, and what isn't
Standard cover is for in-patient treatment: you are admitted for a medically necessary course of treatment, prescribed and supervised by a qualified, registered AYUSH practitioner, on the same conditions as other claims, such as a minimum stay. Usually not covered:
- out-patient AYUSH consultations and medicines, unless your policy or an add-on includes OPD benefits;
- wellness, rejuvenation and "detox" programmes, including spa-style panchakarma packages that don't treat a diagnosed illness;
- treatment at unregistered centres, or by practitioners without recognised qualifications.
Waiting periods, including the one for pre-existing diseases, apply exactly as they do for allopathic treatment.
How to claim
The policy's definition of an "AYUSH hospital" decides most disputed claims. It is typically a government or government-recognised AYUSH hospital, or one registered with the local authorities, with qualified AYUSH practitioners in charge. Check that the hospital meets it before you are admitted.
For cashless treatment, confirm the hospital is in your insurer's or TPA's network; the one-hour and three-hour cashless deadlines above apply as for any claim. For reimbursement at a non-network hospital, inform the insurer within the time your policy sets, and keep the discharge summary, itemised bills, prescriptions and investigation reports. Under the master circular the insurer or TPA has to collect the required documents from the hospital, but keep copies anyway. A rejection must quote the policy term it relies on, and you can take it to the insurer's grievance cell and then the Insurance Ombudsman.
Checklist: reading your policy for AYUSH
- Is AYUSH in-patient treatment covered up to the full sum insured, or is there a sub-limit?
- How does the policy define an "AYUSH hospital", and do the centres you would use meet it?
- Are any AYUSH hospitals in the cashless network near you?
- Is there an OPD or wellness benefit, and does it extend to AYUSH?
- Are specific therapies excluded by name?
Illustrative: with a ₹25,000 AYUSH sub-limit on a ₹10 lakh floater, a ₹1.2 lakh Ayurvedic admission leaves you paying ₹95,000. If your limit is low, compare policies at renewal or port.
Tax deduction on premiums (old regime only)
For Tax Year 2026-27, premiums are deductible under section 126 of the Income-tax Act 2025 (formerly section 80D), but only if you choose the old regime. The new regime under section 202 does not allow this deduction. The amounts are the same as under 80D, which still applies to income for FY 2025-26 filed in 2026.
- Self, spouse and dependent children: up to ₹25,000 a year, or ₹50,000 if the insured person is a senior citizen.
- Parents: a further ₹25,000, or ₹50,000 if a parent is a senior citizen.
- Preventive health check-ups: up to ₹5,000, within the limits above, and the only part that can be paid in cash. Premiums must be paid by a non-cash mode.
The maximum is ₹1 lakh a year, when both you (or your spouse) and your parents are senior citizens. A salaried person under 60 who pays ₹25,000 for the family floater and ₹50,000 for senior parents can deduct ₹75,000, which saves ₹23,400 at the 30% slab plus 4% cess. Whether that tips you to the old regime depends on your other deductions; our old vs new regime comparison works through it.
What to do next
Put your family size and city into the health insurance calculator to see the floor, then round up to the table above. Buy the base floater and super top-up together, and the parents' policy separately. Health cover and an emergency fund work as a pair: the fund pays the deductibles, co-pays and non-medical costs that no policy covers.
