With the case of the COVID-19 pandemic in India increasing exponentially, having a comprehensive health insurance policy to combat the financial crunch during hospitalization is paramount. When you buy health insurance, you must be aware of Sum Insured. Precisely speaking, Sum Insured in Health Insurance is an important term.
Sum Insured in Health Insurance
Sum insured is the amount provided to the policyholder to deal with an unexpected medical emergency. It is the reimbursement of the medical expenses incurred during hospitalization. In the event that the medical expenses are equal to or less than the sum insured, the insurance company clears the entire bill or reimburses the amount to you if you have already paid the hospital bill. In case, the medical bill exceeds the sum insured, you will have to pay the extra cost from your pocket.
Deciding the Right Sum Insured When Buying Health Insurance
Choosing the right sum insured in health insurance is important. This is because when you are hospitalized, the insurance company pays the hospital bill. For example, if the sum insured of your policy is Rs 5 lakh and the treatment cost is Rs 3.5 lakh, then the insurance company will pay Rs. 3.5 lakh from the sum insured of Rs 5 lakh.
But if the sum insured you have opted in your policy is only Rs 3 lakh, and the hospital bill is Rs 3.5 lakh, then the insurer will pay only Rs 3 lakh and the remaining 50 thousand should be paid by you. In that case, you may fall into a financial crisis. That’s why it is very important to select the right sum insured and avoid such a situation.
- Higher sum insured is important as it lets you have enough amount to handle a medical emergency
- With a high sum insured, you can keep your savings intact
- Higher sum insured lets you have less stress during medical emergencies
Choose higher sum insured especially in case of a family floater plan. Since your family shares the sum insured of the plan, the lower sum insured in case of multiple claims will be insufficient.
Factors That Determine Sum Insured
| Health Issues | Go for a higher sum insured if you suffer from any health issue that needs constant medical observations, hospitalization or surgical treatment. |
| Age | Choose higher sum insured if you are young because you have many years to live. |
| Lifestyle | Keep your lifestyle in mind when choosing the sum insured. If you consume alcohol, specify or outside food, opt for a higher sum insured as your chances of falling ill is high. |
| Location | Location is another deciding factor. If you live in a metropolitan city like Delhi, Mumbai, Bangalore, then go for a higher sum insured as medical expenses in such cities are higher compared with medical costs in small cities. |
Sum Insured vs. Sum Assured
People often get confused between the sum insured and the sum assured. These two terms are different.
- Sum Insured– It is the value that is applied to health insurance. It is based on the principle of indemnity that provides reimbursement or compensation to damage, loss. No monetary benefit is rewarded in it. Rather, reimbursement is done as per the Sum Insured.
- Sum assured – It is applied to Life insurance policies. It is a fixed amount the insurance company pays to the policyholder in case of any eventuality. It is a monetary benefit given to the insured or his or her family after the policy term is up.
Final Thoughts
Now you have understood Sum Insured and know how it is different from Sum Assured. You are also aware of its importance. So, when you buy health insurance, opt for the right sum insured to get the best out of your health insurance policy. In case of an individual health insurance plan, choose a minimum of Rs 5 lakh sum insured and in the case of family floater insurance, choose at least Rs 5 lakh sum insured.
