Arogya Sanjeevani — IRDAI Standard Product
Definition
Arogya Sanjeevani is a standard health insurance product mandated by IRDAI through its circular IRDAI/HLT/REG/CIR/201/04/2020, effective from 1st April 2020. Every general insurance company and standalone health insurer in India is required to offer this product with uniform terms, conditions, coverage, and exclusions. The policy is available as an individual or family floater with sum insured options ranging from Rs. 1 lakh to Rs. 5 lakh, and it is designed to provide affordable, no-frills health insurance coverage to a wider segment of the Indian population. The product was introduced as part of IRDAI's mission to increase health insurance penetration, which stood at a mere 3.7% of GDP at the time of launch.
Arogya Sanjeevani features a mandatory 5% co-payment on all claims, no room rent sub-limits, coverage for AYUSH treatments, and a fixed list of exclusions standardized across all insurers. The policy covers in-patient hospitalization, pre-hospitalization expenses up to 30 days, post-hospitalization expenses up to 60 days, day care procedures, road ambulance charges up to Rs. 2,000 per hospitalization, and cataract treatment up to Rs. 40,000 per eye. Since the product wording is identical across insurers, the only differentiating factor for customers is the premium charged and the claim settlement experience of the insurer.
Explanation in Simple Language
Arogya Sanjeevani was created by IRDAI to solve a fundamental problem in Indian health insurance — the lack of standardization. Before Arogya Sanjeevani, every insurer had different policy terms, exclusions, and sub-limits, making it nearly impossible for a common person to compare products. A customer comparing policies from Star Health, ICICI Lombard, and Niva Bupa would find completely different wordings, different exclusion lists, and varying interpretations of what constitutes a covered claim. Arogya Sanjeevani eliminates this confusion by mandating identical coverage across all insurers.
The 5% co-payment clause means that for every claim, the policyholder bears 5% of the admissible bill. For instance, on a Rs. 2 lakh hospitalization bill, the policyholder pays Rs. 10,000 and the insurer pays Rs. 1,90,000. This co-payment serves a dual purpose: it keeps premiums affordable by discouraging frivolous claims, and it ensures the policyholder has some financial stake in every hospitalization. Despite the co-pay, Arogya Sanjeevani remains one of the most value-for-money health insurance products in India, with premiums starting as low as Rs. 4,000 per year for a young individual with Rs. 5 lakh sum insured.
Real-Life Indian Example
Rajesh Kumar, a 38-year-old government school teacher in Lucknow earning Rs. 45,000 per month, purchased an Arogya Sanjeevani policy from New India Assurance with Rs. 5 lakh sum insured for himself, his wife, and two children (family floater). The annual premium was Rs. 9,200 including GST.
Eight months into the policy, Rajesh's wife Sunita developed acute appendicitis and was admitted to a network hospital in Lucknow. The total hospitalization bill came to Rs. 1,10,000 including surgery charges of Rs. 65,000, room charges for 3 days at Rs. 4,500 per day, medicines and consumables of Rs. 18,500, and pre-operative investigation charges of Rs. 13,000. Since Arogya Sanjeevani has no room rent sub-limit, the entire room charge was admissible. After deducting the mandatory 5% co-payment of Rs. 5,500 and non-medical expenses of Rs. 3,200, New India Assurance settled Rs. 1,01,300 through cashless facility. Rajesh paid only Rs. 8,700 out of pocket for the entire treatment. The remaining sum insured of Rs. 3,98,700 was available for the rest of the policy year.
Numerical Example
Arogya Sanjeevani Premium Comparison Across Insurers (Rs. 5 Lakh SI, Individual, Age 35):
- New India Assurance: Rs. 5,650/year
- Star Health: Rs. 5,890/year
- ICICI Lombard: Rs. 5,420/year
- Niva Bupa: Rs. 5,780/year
- Care Health: Rs. 5,310/year
- Bajaj Allianz: Rs. 5,500/year
Family Floater (2A + 2C, eldest member age 40, Rs. 5 Lakh SI):
- Range: Rs. 9,200 to Rs. 11,500/year across insurers
Claim Settlement Example:
Hospitalization Bill: Rs. 2,50,000
Non-Medical Expenses Deducted: Rs. 8,500
Admissible Amount: Rs. 2,41,500
5% Co-payment: Rs. 12,075
Insurer Pays: Rs. 2,29,425
Policyholder Pays: Rs. 20,575 (co-pay + non-medical)
Comparison with Non-Standard Policy (Rs. 5 Lakh SI, same age):
- Premium: Rs. 7,500 - Rs. 12,000/year (30-100% higher)
- Room rent sub-limit: May apply (reducing claims further)
- Co-pay: 0% (but premium is higher)
- Net Benefit: Arogya Sanjeevani offers better value at lower premium for basic coverage needs.
Policy Clause Reference
IRDAI Circular IRDAI/HLT/REG/CIR/201/04/2020 — Standard Individual Health Insurance Product (Arogya Sanjeevani Policy): (1) Mandatory 5% co-payment on all admissible claims with no option to waive or modify. (2) Sum insured range of Rs. 1 lakh to Rs. 5 lakh in multiples of Rs. 50,000. (3) No room rent sub-limits — any category of room is covered. (4) Waiting period: 30 days for illness (not accidents), 48 months for pre-existing diseases, 24 months for specified diseases/procedures. (5) AYUSH coverage included as inpatient hospitalization. (6) Cataract treatment capped at Rs. 40,000 per eye per policy year. (7) Road ambulance cover up to Rs. 2,000 per hospitalization. (8) Modern treatment methods covered as listed in Annexure-I of the circular. (9) All insurers must file identical product terms; only premiums may differ.
Claim Scenario
Meena Devi, a 52-year-old homemaker from Varanasi, had an Arogya Sanjeevani policy from United India Insurance with Rs. 3 lakh sum insured. She was diagnosed with gallstones and required a laparoscopic cholecystectomy, which is classified as a day care procedure.
The hospital bill was Rs. 85,000 covering surgeon fees, anaesthesia, operation theatre charges, medicines, and diagnostic tests. Since laparoscopic cholecystectomy is a covered day care procedure under Arogya Sanjeevani, Meena Devi raised a cashless claim. United India Insurance processed the pre-authorization within 4 hours. After the procedure, the final bill was assessed: non-medical items worth Rs. 2,800 were deducted, and the mandatory 5% co-payment of Rs. 4,110 was applied on the admissible amount of Rs. 82,200. The insurer settled Rs. 78,090 directly with the hospital. Meena Devi paid Rs. 6,910 out of pocket. The claim was settled within 6 working days of discharge, well within the IRDAI-mandated timeline of 30 days for cashless claims.
Common Rejection Reason
Common reasons for Arogya Sanjeevani claim rejections include: (1) Claims filed during the initial 30-day waiting period for illnesses — only accidents are covered during the first 30 days from policy inception. (2) Pre-existing disease claims before completing the 48-month waiting period — this is the most common rejection ground, especially for diabetes and hypertension-related complications. (3) Outpatient treatments that do not require hospitalization for at least 24 hours (except listed day care procedures) — Arogya Sanjeevani covers only inpatient and day care treatments. (4) Cosmetic or aesthetic procedures, dental treatments (unless arising from an accident), and infertility treatments are excluded. (5) Claims for non-allopathic treatment taken outside recognized AYUSH hospitals — AYUSH coverage applies only when treatment is received in a government hospital or NABH/NABL accredited facility.
Legal / Arbitration Angle
In Insurance Ombudsman Award IO/BLR/A/HI/2022/0312, the Ombudsman directed Bajaj Allianz to pay an Arogya Sanjeevani claim of Rs. 1,85,000 that was rejected on grounds that the policyholder had a "pre-existing tendency" towards hypertension. The Ombudsman held that a tendency or family history is not the same as a diagnosed pre-existing disease, and the insurer failed to produce any medical evidence showing the policyholder was diagnosed with or treated for hypertension before policy inception. The Ombudsman noted that under Arogya Sanjeevani's standardized terms, the definition of pre-existing disease requires actual diagnosis or treatment, not mere predisposition.
In another significant ruling, the Consumer Forum in Patna directed New India Assurance to pay Rs. 45,000 compensation in addition to the claim amount for delayed processing of an Arogya Sanjeevani cashless claim beyond the IRDAI-mandated timeline. The Forum emphasized that standardized products carry standardized service obligations.
Court Case Reference
In United India Insurance vs. Smt. Kamla Devi (District Consumer Forum, Jaipur, 2023), the Forum ruled on an Arogya Sanjeevani claim dispute where the insurer had rejected a cataract surgery claim exceeding the Rs. 40,000 per eye sub-limit. The total bill was Rs. 72,000 for one eye, and the insurer paid only Rs. 40,000 as per the policy terms. The Forum upheld the insurer's decision, stating that the cataract sub-limit is clearly defined in the standardized Arogya Sanjeevani policy wording mandated by IRDAI, and both the insurer and the policyholder are bound by these terms. The Forum, however, directed the insurer to pay the 5% co-payment calculation only on the admissible Rs. 40,000, not on the full Rs. 72,000 bill, reducing the co-pay from Rs. 3,600 to Rs. 2,000.
Common Sales Mistakes
Frequent mistakes made by agents selling Arogya Sanjeevani: (1) Not disclosing the mandatory 5% co-payment — customers discover it only during a claim and feel misled, damaging trust and renewal prospects. (2) Recommending Arogya Sanjeevani to customers who can afford comprehensive policies — the Rs. 5 lakh maximum sum insured is insufficient for major surgeries or cancer treatment, and the customer is underinsured. (3) Failing to explain the 48-month PED waiting period — customers with existing diabetes or hypertension expect immediate coverage and file grievances when claims are rejected. (4) Not advising customers about the cataract sub-limit of Rs. 40,000 per eye — senior citizens who rely on this coverage are disappointed when the actual surgery costs Rs. 60,000-80,000. (5) Selling Arogya Sanjeevani to families with senior members above 65 years solely based on low premium without explaining that a dedicated senior citizen plan may offer better coverage despite higher premium.
Claims Dispute Example
Prakash Sharma purchased an Arogya Sanjeevani policy from Care Health in 2021 with Rs. 5 lakh sum insured. He had declared controlled Type 2 diabetes at inception. In December 2023, only 28 months into the policy, Prakash was hospitalized for a diabetic foot infection requiring surgical debridement. The bill was Rs. 1,45,000.
Care Health rejected the claim citing the 48-month waiting period for pre-existing diseases, as only 28 months had been completed. Prakash argued that his hospitalization was for an acute infection, not for diabetes management, and that diabetes was merely a contributing factor, not the direct cause.
The Insurance Ombudsman reviewed the case and upheld the insurer's decision, noting that Arogya Sanjeevani's standardized terms define a PED-related claim as any claim where the pre-existing condition is a contributing or aggravating factor. The diabetic foot infection was a direct complication of uncontrolled diabetes, and the 48-month waiting period legitimately applied. Prakash was advised to continue his policy and avail full PED coverage after completing the waiting period in 2025.
Learning for POSP / Advisor
Arogya Sanjeevani is an excellent entry-level product for POSP agents to recommend to price-sensitive customers. Key selling strategies include: (1) Position it as the "government-approved standard policy" — the IRDAI mandate gives it credibility and trust, especially in tier-2 and tier-3 cities. (2) Emphasize the no-room-rent-limit feature — many expensive policies have room rent caps, but Arogya Sanjeevani does not. (3) Explain the 5% co-pay as a fair trade-off for lower premiums — most customers find Rs. 5,000-10,000 co-pay on a Rs. 1-2 lakh claim acceptable. (4) Use it as a stepping stone — once the customer sees the value of insurance through a claim experience, they can be upgraded to a comprehensive policy. (5) Compare premium across insurers and recommend based on claim settlement ratio and network hospital availability in the customer's city.
Summary Notes
• Arogya Sanjeevani is an IRDAI-mandated standard health insurance product, identical across all insurers.
• Sum insured: Rs. 1 lakh to Rs. 5 lakh (multiples of Rs. 50,000).
• Mandatory 5% co-payment on all claims — cannot be waived or modified.
• No room rent sub-limits — any room category is covered.
• Cataract sub-limit: Rs. 40,000 per eye per year.
• Road ambulance: Up to Rs. 2,000 per hospitalization.
• Waiting periods: 30 days (illness), 24 months (specified diseases), 48 months (PED).
• AYUSH treatment covered as inpatient hospitalization.
• Only premium and claim settlement quality differ across insurers.
• Best suited as entry-level cover or base policy supplemented with Super Top-up.
• IRDAI Circular: IRDAI/HLT/REG/CIR/201/04/2020.
Case Study Questions
Q1.A 42-year-old small business owner in Nagpur with a monthly income of Rs. 35,000 wants health insurance for the first time for himself, his wife (38), and their son (12). He has controlled hypertension for the past 3 years. Compare the suitability of an Arogya Sanjeevani policy (Rs. 5 lakh, family floater) versus a regular comprehensive policy (Rs. 10 lakh) considering premium affordability, coverage adequacy, the PED waiting period, and long-term protection needs. Recommend an optimal insurance strategy.
Q2.Seema, age 55, has had an Arogya Sanjeevani policy with Rs. 3 lakh sum insured for 2 years and now needs cataract surgery in both eyes. The estimated cost is Rs. 65,000 per eye. Calculate her total out-of-pocket expenses considering the cataract sub-limit, the 5% co-payment, and likely non-medical deductions of Rs. 3,000 per eye. Advise whether she should have purchased additional coverage.