What is the Sum Insured in Health Insurance?

How Sum Insured Works in Health Insurance

The sum insured in health insurance refers to the maximum total amount the health insurer will pay on the medical expenses incurred by a policyholder. This is within the scope of the policy term (duration + other considerations). 

It is a financial cover or limit that is determined by an insurance company, beyond which a policyholder has to pay all the extra costs incurred. It is essential to know the concept of the sum insured since it directly bears on the degree of cover and the premium amount.

How Sum Insured Works

While you buy a medical insurance policy, you decide your sum insured amount as per your medical needs, family members, and your financial standing. For example, if you have taken a sum insured of Rs. 5,00,000, this means your medical expenses are covered up to the sum insured during the policy year, all the hospitalisation/ treatments will be covered; however, any extra charges need to be paid by the customer themselves.

Example:

If the hospital bill is Rs. 3,00,000, the insurer will pay this entire amount as it comes under the sum assured.
If the bill is Rs. 6,00,000, the insurer will pay Rs. 5,00,000 (Sum Assured). The Policyholder will reimburse the rest of Rs. 1,00,000.

Health insurance plan prices (i.e., premiums) are directly proportional to the sum insured; so you can tell that a higher sum insured means a higher premium. 

Determinants of Sum Insured

1. Individual v/s Family
   A family floater policy covers multiple family members under one limit. At the same time, an individual may purchase a policy for a lower sum insured  than this.
2. Age and Health Condition
   Senior or aged people suffering from other ailments might be required to pay off a larger sum insured, as the risk of medical costs rising is higher.
3. Place of Insurance Matters
   The sum insured is different for different regions. Metropolitan cities like Mumbai or Delhi will cost more for healthcare than small cities or towns. Hence, the sum insured is also on the higher side in the case of metropolitan cities.
4. Type of Policy
   Critical illness coverage or senior citizen coverage is a niche product that normally has a higher sum insured. This is to cover a few specific treatments that can be very costly.

Importance of Choosing the Right Sum Insured

• Extensive Coverage: The right sum insured will ensure you do not lose more money during major medical emergencies. Thus reducing out-of-pocket expenses.
• Balance Premiums and Coverage: A higher sum insured is usually expensive. You have to, therefore, find a balance between affordable premiums and coverage. A higher sum insured also means higher premium payment(higher health insurance plan prices), but it might keep you safe in case of hospitalisation. 
• Future-Proof: A higher sum insured will protect you against future increases in healthcare costs and give you enough cover over time.

Restoration Benefit and Sum Insured

Some policies include restoration benefits. With these benefits, the sum insured is reinstated if it gets exhausted during the policy term. For instance, if you have a sum insured of Rs. 5,00,000 and it gets fully utilised due to a claim, the restoration benefit ensures the sum insured is replenished. This allows you to make additional claims within the same year.

Star Health Insurance provides customised health insurance solutions through its diverse range of policies. It offers flexible sum insured options to meet varied healthcare needs. It gives peace of mind and financial security in case of a medical emergency through affordable premiums, cashless hospitalisation, and network coverage.

Also read:-

→ What is Top Up in Health Insurance

→ What Is TPA In Health Insurance

→ What Medical Tests are Required for Health Insurance

→ What You Need to Know About Group Health Insurance

→ When Do I Add Baby to Health Insurance