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Understand the Term ‘Sum Insured’ under Health Insurance


Jul 27 2020


The spike in medical expenses has made it necessary to buy a health insurance policy. It enables you to access medical treatment by paying the premium towards the policy you purchase. However, you must understand the concept of the sum insured in health insurance to get optimum coverage.

A health insurance policy is designed to assist you medically and cover you financially. The sum insured is the maximum amount that an insurer pays to you in case of any medical emergency. It includes the overall medical expenses incurred in one financial year or throughout the tenure, subject to terms and conditions.

Let us take an instance to simplify the concept. Say the sum insured by a particular insurance company is Rs.1 lakh per year. In one year, medical expenses may exceed the amount insured. It includes the hospitalizations bills, consultation fees, diagnostics, and much more. If the bill amounts to Rs.1.2 lakh, then the company will compensate you only the sum insured. You need to pay the balance of Rs.20,000 from your pocket.

Therefore, it is always better to get higher sum insured, wherever possible. To get a higher sum insured, you also need to pay premium in the respective manner. Irrespective of the number claims you make for various hospitalizations; the company will only pay you the sum insured. Here, you need to bear the expenses once the insured amount exhausts before the policy expires.

Sum Insured Vs Sum Assured

Often there is confusion between these two terms. Let us underline the distinction and make it simpler for you. Owing to the rising demand for health insurance plans, certain companies offer both the benefits.

The sum assured is the pre-defined amount that the insurer guarantees to the policyholder. In a life insurance policy, it is the amount promised to the nominees of the insured in case of demise. The amount of premium payable is fixed according to the sum assured by the company.

The sum insured in health insurance is different from the sum assured. A fundamental difference is that the sum assured is entirely payable irrespective of the loss incurred. The entire pre-decided monetary benefit can be claimed by the individual when the time comes.

However, the sum insured will cover only the exact expense, neither less nor more. Let us say the insurance company offers am insured of 2 lakhs per year. In a year your hospitalization bill may amount to Rs.1.5 lakh. Here, the insurance company will cover that expense only. You cannot claim the spare amount of Rs.50,000.

Health Insurance in Today’s Time

Death and disability are the harsh reality of life. It inflicts emotional damage to the family and often results in a fiscal burden. Only proper health insurance can spare you the financial worry in extreme medical situations. A health insurance policy provides you medical aid and healthcare amenities without any fuss.

Hence it is essential to choose a plan that befits your requirement and budget. Investing in a health insurance policy gives you the boon of mental peace and medical security. So, don’t waste time when it comes to your as well as your family’s well-being.