India’s young workforce is increasingly earning, saving, and investing—but when it comes to health insurance, many still view it as a poor financial decision
rather than essential protection. The perception stems from a mix of behavioural biases, financial priorities, and structural gaps in the insurance ecosystem. They are not spending impulsively but they are managing cashflow effectively. However, they prioritize liquidity over long-term wealth creation and protection. This behavior stems in part from a historic lack of formal financial education as only 27%of Indian adults are financially literate, compared to the global average of 35%, as per the report by Niva Bupa Health Insurance citing National Centre for Financial Education, 2019. The report highlighted that 40% of income goes toward essential expenses such as groceries, commute, and school fees of their children. Highlighting the young investors' behaviour, the report said Young Indians prefer immediate access and gratification over long-term wealth creation. "26% of the income is held as general savings(cash or bank accounts)and 14% goes toward leisure and lifestyle spends, together far exceeding the 12% invested in instruments like FDs, mutual funds, or SIPs," the report said. The report highlighted that only 8% of income goes into insurance plans. Within this, the allocation is lopsided: vehicle and life insurance each take 3% of total income, while personal health insurance accounts for just 1%. 51% rank health insurance among their top three priorities while evaluating options for both investment as well as insurance, it said.
Affordability remains a concern
The report highlighted affordability as key factor behind the insurance behaviour of the young population. "This positive interest rises with personal income, reaching 65% among those earning ₹10 lakh or more annually, indicating that higher-income groups are more aware of its importance and feel financially equipped to consider it," the report said.
As per the survey done by the Niva Bupa, 46% cited they could no longer afford the premium payment. This is corroborated by the fact that 66% of lapsers carry active financial liabilities. Specifically, 33% are managing personal loans and 17% are servicing home loans. In these households, insurance premiums seem to compete with
loan repayments, making the policy a prime candidate for cost-cutting.
No Returns Mindset Dominates
A key reason is the comparison with return-generating instruments. Around 33% of young Indians prefer investments that deliver tangible returns, such as mutual funds or fixed deposits, instead of paying premiums that may not yield immediate benefits.
33% of respondents view insurance through the lens of traditional investing. They prefer instruments that offer tangible returns, viewing insurance premiums as a "lost" expense if not utilized.
