Arogya Sanjeevani Policy

The Arogya Sanjeevani Policy is a standardised health insurance product introduced by the Insurance Regulatory and Development Authority of India (IRDAI) to provide affordable, uniform and basic health insurance coverage to the Indian population. In the context of banking, finance and the Indian economy, this policy represents a significant step towards expanding health insurance penetration, strengthening financial protection against medical expenses and supporting inclusive economic development.
By mandating a common structure across all general and standalone health insurers, the Arogya Sanjeevani Policy simplifies health insurance offerings and enhances accessibility, particularly for first-time and middle-income policyholders.

Background and Rationale of the Arogya Sanjeevani Policy

India has historically faced low health insurance coverage, with a large proportion of healthcare expenses financed through out-of-pocket spending. This has contributed to household financial stress and pushed vulnerable populations into poverty.
The Arogya Sanjeevani Policy was introduced to:

• Provide a simple and affordable health insurance option
• Reduce complexity and variation in policy terms
• Improve transparency and comparability across insurers
• Encourage voluntary adoption of health insurance

The policy aligns with broader public health and financial inclusion objectives of the Indian government.

Key Features of the Arogya Sanjeevani Policy

The Arogya Sanjeevani Policy follows a standard product design, ensuring consistency across insurers while allowing limited flexibility in pricing and service delivery.
Core features include:

• Sum insured ranging typically from ₹1 lakh to ₹5 lakh
• Coverage for hospitalisation expenses, including room rent, ICU charges and medical procedures
• Pre-hospitalisation and post-hospitalisation expenses
• Day-care procedures not requiring 24-hour hospitalisation
• Coverage for modern treatments as specified by the regulator

This standardisation enhances clarity and ease of understanding for policyholders.

Eligibility and Policy Structure

The policy is designed to cater to a wide demographic base, including individuals and families.
Eligibility criteria generally include:

• Entry age starting from 18 years for adults
• Coverage for dependent children from a specified minimum age
• Individual and family floater options
• Lifetime renewability, subject to policy terms

These features promote long-term financial planning and healthcare security.

Role of Insurance Companies and the Banking Sector

While issued by insurance companies, the distribution of the Arogya Sanjeevani Policy is closely linked to the banking and financial sector. Banks play an important role as corporate agents and distribution channels.
The involvement of banks includes:

• Offering the policy through bancassurance arrangements
• Facilitating premium payments and renewals
• Integrating insurance products with savings and financial planning services
• Enhancing outreach in semi-urban and rural areas

This integration strengthens the role of banks as comprehensive financial service providers.

Premium Structure and Affordability

Premiums under the Arogya Sanjeevani Policy are regulated to ensure affordability, while allowing insurers to price based on age, sum insured and geographical factors.
Affordability benefits include:

• Lower premiums compared to comprehensive health plans
• No hidden or complex pricing structures
• Predictable cost for basic healthcare coverage
• Suitability for middle- and lower-middle-income households

Affordable premiums encourage broader participation and risk pooling.

Coverage Scope and Limitations

While comprehensive in nature for a standard product, the policy has defined limitations to maintain affordability and uniformity.
Coverage scope includes:

• In-patient hospitalisation expenses
• Specified modern treatments
• AYUSH treatment coverage

Common exclusions include:

• Certain waiting periods for pre-existing diseases
• Non-medical expenses
• Treatments not specified in the standard policy wording

Understanding these limitations is essential for informed financial decision-making.

Contribution to Financial Inclusion and Risk Protection

The Arogya Sanjeevani Policy contributes significantly to financial inclusion by protecting households from catastrophic healthcare costs.
Its contribution includes:

• Reducing out-of-pocket medical expenditure
• Preventing medical emergencies from becoming financial crises
• Encouraging formal risk management through insurance
• Supporting health security for informal sector workers

This risk protection enhances household financial stability and consumption resilience.

Economic Significance for the Indian Economy

At a macroeconomic level, the Arogya Sanjeevani Policy supports economic stability by mitigating health-related financial shocks that affect productivity and savings.
Economic implications include:

• Improved workforce health and productivity
• Reduced poverty due to medical expenses
• Strengthening of the health insurance market
• Increased flow of long-term funds into the insurance sector

These outcomes support sustainable and inclusive economic growth.

Regulatory Oversight and Standardisation

IRDAI plays a central role in regulating the Arogya Sanjeevani Policy, ensuring uniformity, consumer protection and market discipline.
Regulatory objectives include:

• Standard policy wording across insurers
• Transparent disclosure of benefits and exclusions
• Fair pricing practices
• Effective grievance redressal mechanisms

This oversight enhances trust in the insurance system.

Challenges and Limitations

Despite its benefits, the policy faces certain challenges:

• Limited coverage compared to comprehensive health plans
• Lack of awareness among potential policyholders
• Perception of insufficient sum insured in high-cost urban healthcare
• Need for stronger insurance literacy initiatives