What is Sum Insured in Health Insurance?


What is Sum Insured in Health Insurance?

Importance & Benefit of Sum Insured in Health Insurance

Health insurance is crucial in safeguarding your finances and ensuring that your loved ones receive ample care in their time of need. Although people today know the importance of an appropriate health insurance plan, many do not opt for one because the coverage is confusing and does not help when needed due to various terms & conditions.

One confusion that mystifies various minds is “What is Sum Insured in health insurance, and why is it important?”.

Thus, this article addresses the confusion regarding the sum insured and explains its importance and benefits. First, let us explain what is the sum insured in Health Insurance.

What is Sum Insured in Health Insurance?

The sum insured is the maximum financial coverage for the insured member(s) that can be utilised within a policy term. It is the coverage offered based on the expenses incurred by an insured member out of a medical emergency.

If the medical bills exceed the sum insured, policyholders must bear the remaining amount from their pockets. The Sum Insured is based on the principle of indemnity.

Why is it Important to Have a High Sum Insured?

Having an appropriate sum insured is as important as having a health insurance plan in the first place. Below are a few reasons why having a comprehensive sum insured in Health Insurance is essential.

  • Provides Appropriate Coverage for Each Family Member: Whether you cover one member or six, health insurance with a high sum insured shall ensure that each member has an ample share in the insured sum.
  • Provides Ample Coverage for Each Benefit: Health insurance with a high sum insured is crucial for individuals who require maximum coverage across various benefits. For instance, health insurance with a lower sum insured may offer less coverage for benefits such as OPD visits, annual health checkups, etc. In contrast, health insurance with a high sum insured may provide ample coverage for the same.
  • Gives Access to Quality Treatment: A health insurance with a lower sum insured may not provide advanced treatments such as robotic surgeries and crucial daycare treatment.  You may need a high sum insured in your health insurance plan to ensure you get covered for the same. 
  • Saves Your Finances: Health insurance saves your pockets from losses when a medical emergency strikes. However, a plan with a lower coverage may exhaust sooner and not provide comprehensive coverage in times of need. Thus, it is essential to choose a plan with higher coverage to avail of all the benefits.

Note: While having health insurance with a high sum insured can be beneficial in many ways, it is important to beware of fraud and read out the policy documents carefully before opting for a plan.

How Does Sum Insured in Health Insurance Work?

Let us understand the working of a Sum insured with the help of an example.

Suppose Mrs Mala bought a health insurance plan to cover her family 5. The sum insured offered by the insurer was 10 Lakh. During the policy term, her mother-in-law was hospitalised twice, incurring ₹25,000 and ₹70,000 during the hospitalisation. 

Further, her father-in-law had to undergo a major surgery that incurred ₹10,00,000. Then, in such a case, below is the illustration of how the sum insured would work.

Claim 1: The first claim raised for Mala’s mother-in-law was ₹ 25,000 which the insurer entirely covered. 

Total Sum insured: ₹10,00,000.

Claim Approved: ₹25,000

Remaining Sum Insured: ₹9,75,000

Claim 2: The second claim raised was ₹70,000.

Remaining Sum Insured1: ₹9,75,000

Claim Approved: ₹70,000

Remaining Sum Insured: ₹9,05,000

Claim 3: The third claim was raised for ₹10,00,000.

Remaining Sum Insured 2:  ₹9,05,000 

Claim raised: 10,00,000

Claim Approved: ₹9,05,000 

Remaining Sum Insured: ₹0

Note: The above scenario assumes no exclusions in the claim raised. Please refer to the policy documents while filing the claim.

Thus, the sum insured is the maximum limit that you can avail of while filing claims. The coverage decreases every time you file a claim and ultimately exhausts after reaching the maximum limit.

Summing It Up 

With the increasing healthcare expenses, the need for health insurance increases. Hence, opting for an insured sum of maximum value is advised to secure you from financial risk.

However, we create comprehensive health insurance guides to ensure you make an informed decision about purchasing the best health insurance. 

Now that you’ve understood how sum insured in health insurance works choose from the best health insurance plans available at the Care Health Insurance website. 

Here’s a tip: Buying Health Insurance online allows you to understand health insurance more comprehensively! Try now!

Disclaimer: Plan features, benefits, coverage, sum insured and underwriting of claims are subject to policy terms and conditions. Please refer to the brochure, sales prospectus, and policy documents carefully.

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Q. What is Sum Assured in Insurance?

Sum assured is the maximum amount offered to the insured member if an unforeseen emergency strikes during a policy term.

Q. What is the Family Floater Sum Insured?

The coverage amount in a family health insurance plan is known as the family floater sum insured. The family floater sum insured is the maximum insured amount an insured family can utilise.

Q. What is the Difference Between the Sum Insured and the Sum Assured in Insurance?

Sum insured and sum assured are two terms usually used interchangeably in insurance. Sum insured is the maximum coverage in health insurance, whereas sum assured is the maximum in life and term insurance.

Q. What is the Base Sum Assured in Insurance?

The base sum assured is the basic amount issued to the insured member without other add-ons. Suppose you have purchased health insurance with ₹5,00,000 coverage and have enhanced your plan with ₹3,00,000 add-on. In this case, the overall sum insured will be ₹8,00,000, while the base sum insured remains ₹5,00,000.


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