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The sum insured in health insurance is the maximum amount one can claim under their health insurance plan. For any amount beyond the sum insured, the policyholder must bear those costs out of their pocket.
Health insurance jargon can often lead to confusion for those buying health insurance for the first time. What’s worse, this confusion leads them to buy the wrong insurance policy. One such important but confusing term is “sum insured”. It is used very frequently at the time of purchasing a health insurance plan and also while making claims.
If you are also confused about the meaning of sum insured in health insurance, this blog is for you. Here, we will discuss everything you need to know about the sum insured.
Let’s dive in!
What is the Sum Insured in Health Insurance?
As the name suggests, sum insured is the maximum amount the insured person can claim under their health insurance plan. In other words, it is the maximum amount offered by the insurance company to the policyholders in case they make a claim against a medical expense. Note that this amount can be provided for any number of claims that are made during the policy year.
For example, suppose you purchase a health insurance plan with a sum insured of ₹5 lakh. A few months later, you got diagnosed with malaria and got hospitalised.
Let us say the bill came out to be ₹2 lakh. You can make your first claim of ₹2 lakh and get reimbursed as the claim amount is less than your sum insured. Now, you still have ₹3 lakh left as your sum insured. After a few months, you file another claim of ₹4 lakh. In this case, your insurance provider will only pay ₹3 lakh as your sum insured limit will be over. You will have to pay the remaining ₹1 lakh out of your pocket.
Is Sum Insured the Same as Sum Assured?
Many first-time health insurance buyers often get confused between the terms ‘sum insured’ and ‘sum assured.’ We have already discussed what sum insured in health insurance is. Let us now understand what sum assured is.
Sum assured refers to a fixed amount paid by the insurance company to the policyholders in the face of an eventuality. Note that this amount is decided by the insured and the insurer at the time of buying the insurance policy.
In other words, the sum assured on maturity of the policy is a lump-sum benefit provided by the insurance company to the policyholder.
3 Reasons to Choose the Right Sum Insured
Following are the reasons why it is important to choose the right sum insured in health insurance:
Ensure Sufficient Healthcare Coverage
The right sum insured ensures sufficient medical coverage for the policyholder. If you opt for a lower sum insured, then you will have to pay the exceeding amount from your wallet to cover the medical expenses.
On the other hand, if you choose a higher sum insured than your requirement, then you will have to deal with hefty premiums unnecessarily. Hence, it is important to choose a sum insured that is neither too high nor too low. It should be enough to meet your requirements.
Peace of Mind
When you have the right sum insured in health insurance, you can avoid the hassle of arranging money at the last moment in case of any medical emergency.
Optimise Your Savings
With the right sum insured in your health insurance policy, you can protect your savings. In the event of a medical emergency or a planned treatment, the insured sum will be sufficient to cover the medical expenses. Therefore, you will not need to use your savings to pay the expensive bills.
How to Choose the Right Sum Insured in Health Insurance?
There are multiple factors that need to be considered when calculating the right sum insured in health insurance. These are as follows:
Age of the Insured: The higher the age, the higher your chances of getting sick, and the higher the sum insured you should choose. It is as straightforward as that.
Current Medical Condition: It is another major factor that needs to be addressed when choosing the right sum insured. You must go for a higher sum insured in case you have any pre-existing conditions.
Type of Health Insurance Plan: The choice of health insurance plan also dictates the value of the sum insured. If you buy an individual health insurance plan, a relatively lower sum insured will be sufficient. However, if you purchase a family floater policy, a higher sum insured is advisable.
Medical Services in the Area: Some places offer more expensive medical treatments than others. Thus, it is important to consider the cost of healthcare services in your area to decide whether you need a higher or a lower sum insured.
Income of Policyholder: If you have a low income, then it is advisable to consider the premium cost when choosing the insured sum. Make sure to choose a premium amount that stays within your budget.
Final Words
Sum insured in health insurance is one of the most important considerations when purchasing a health policy. It plays a pivotal role at the time of making reimbursement claims.
If your insured sum is lower than your medical expenses, then you will have to pay the remaining cost out of your pocket. Hence, it is advisable to choose the right sum insured as per your requirements.
