The impact of information deficiency on health insurance schemes


07 Aug 2023

Read about the impact of information deficiency

Health insurance plays a critical role in providing protection and access to quality healthcare services. However, the effectiveness of health insurance schemes can be significantly influenced by information deficiency. When individuals lack essential information about their insurance coverage, policy terms or the claims process, it can lead to various challenges and negative consequences.

The reason behind the impact of information deficiency on health insurance

1. Limited understanding of coverage

Information deficiency can lead to a limited understanding of the coverage. Policyholders may not be aware of the specific medical services, treatments or procedures covered. Consequently, they might forgo seeking essential healthcare or assume that certain treatments are not covered when they are ill.

For instance, a policyholder might be unaware that their insurance covers preventive care services such as vaccinations or screenings. As a result, they may miss out on crucial preventive measures that can help detect and manage potential health issues.

2. Inadequate utilization of benefits

This underutilization can prevent policyholders from accessing necessary medical care, leading to untreated health conditions and potential complications. When individuals lack information about the benefits available to them, they may underutilize their health insurance coverage.

For example, a person might have coverage for mental health services, but due to a lack of awareness, they may not seek treatment for anxiety or depression, ultimately impacting their overall well-being.

3. Challenges in claiming process

Policyholders might be unsure about the required documentation, the reimbursement process or the timeline for claim settlement. Inadequate information on health insurance can lead to confusion and challenges during the claims process. This can result in delayed or denied claims, causing financial strain and frustration for individuals seeking reimbursement for medical expenses.

4. Missed opportunities for cost savings

If policyholders are not aware of these benefits, they may miss opportunities to save on healthcare expenses. Health insurance policies often offer various cost-saving features, such as cashless hospitalization or network discounts.

For instance, a policyholder might choose a non-network hospital for treatment, unaware that they could have availed of cashless services at a network hospital, resulting in out-of-pocket expenses that could have been avoided.

5. Difficulty in decision making

Information deficiency can make it challenging for individuals to make informed decisions when choosing a health insurance policy. Without a clear understanding of the coverage, exclusions and terms of different policies, one may struggle to select a plan that best suits their needs.

6. Impact on financial planning

When individuals lack information about their insurance, they may be inadequately prepared for potential healthcare costs, increasing their financial vulnerability in case of medical emergencies.

7. Limited awareness of policy updates

Health insurance policies can undergo updates or changes over time. This lack of awareness can lead to policy lapses, missed premium payments, or accidental non-renewal.

Addressing information deficiency

To mitigate the impact of information deficiency on health insurance schemes, it is essential for insurance providers and policymakers to take proactive measures:

  • Policy details, coverage and claim procedures should be clearly and transparently communicated to policyholders.

  • Education and awareness programs must be conducted to help policyholders understand their coverage better.

  • Policyholders need to be informed about any changes or updates to their policies promptly. This can be done through emails, messages or notifications on their customer portals.

  • Investing in efficient customer service to address policyholders can solve queries and concerns promptly. Well-trained customer service representatives can provide personalized assistance and guide policyholders through the claims process.

  • Policy documents should be written in clear and straightforward language, avoiding technical jargon.


Policyholders who lack essential information may underutilize their coverage, face challenges during the claims process and miss out on cost-saving opportunities. Information deficiency can have a significant impact on the effectiveness of health insurance schemes. To address information deficiency, visit kotak general insurance for clear and transparent communication, education programs and improved customer service for comprehensive health insurance. By empowering policyholders with the necessary knowledge, health insurance schemes can fulfill their purpose of providing financial security and access to quality healthcare services during times of need.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.