Is NPS Swasthya enough for medical emergencies? Here’s the reality
Published by India Today
Abhishek Kumar's role: Quoted
Abhishek Kumar cautioned that NPS Swasthya is the subscriber's own money rather than insurance, said withdrawals cut retirement compounding, and suggested using it only as a third layer after a base health policy and a super top-up.
What Abhishek Kumar said
Can NPS Swasthya replace a health insurance policy?
No. This isn't insurance; it is your own money. A health policy pays up to the sum insured when you claim, but NPS Swasthya lets you use only what you have put in, and even then you can take out at most 25% of what you contributed. On a contribution of ₹25,000, that is ₹6,250, while a single day in the ICU of a big-city hospital can cost ₹40,000 or more. In my view that is not protection but a savings account with extra steps.
What does withdrawing from NPS Swasthya cost my retirement savings?
Every rupee you take out stops compounding for the rest of your working life, which could be 25 years or more. A withdrawal made in your mid-thirties can therefore leave your retirement corpus far smaller than it would otherwise have been, because the growth on that money is lost along with the money itself.
Why might relying on NPS Swasthya alone leave a family exposed?
First, you need ₹50,000 accumulated before you can draw on it for health costs, and for many households, particularly families already paying medical bills, getting there takes time. By then, a regular family floater policy could already have paid several claims. The bigger risk is a false sense of security: someone who skips health insurance because they have NPS Swasthya could face a ₹12 lakh ICU bill with only ₹2 lakh in the account.
Where does NPS Swasthya fit in a health plan?
I see NPS Swasthya as worth using only as a third layer in a financial plan. Start with a basic health policy, add a larger cover on top of it through a super top-up, and only then bring in NPS Swasthya as an additional cushion. The product itself isn't bad; the problem is that the way it is being marketed is misleading.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on retirement
The article looks at NPS Swasthya, which lets subscribers use part of their own NPS contributions for medical costs, and why advisers warn against treating it as health insurance. It covers the 25% withdrawal limit, the minimum balance needed before use, the cost to retirement savings and where the product fits in a plan.
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Is NPS Swasthya enough for medical emergencies? Here’s the reality