What is Sum Insured In Health Insurance

With the rising medical costs and increase in lifestyle diseases, it can become difficult to avail of the best healthcare facilities without a health insurance. Insurance will allow you to get the best treatment and medication in case of an illness without having to worry about the cost associated with the same. Before you apply for an insurance policy, you need to understand the health insurance terms associated with it. ‘Sum insured’ is undoubtedly one of the most important terms when it comes to health insurance.

It is essential for you to learn about sum insured before making a decision to purchase a health insurance plan. The sum insured is the maximum value for a particular year that the insurance company can pay if you are hospitalized. Any amount exceeding the sum insured will have to be borne by you. This policy works on the principle of indemnity. It means that any compensation received for the loss, injury, or damage suffered by you. The policy will only cover the loss because of the damage caused to you. The amount you agree on the sum insured will be the maximum amount you receive in case of medical treatment or hospitalization.

For example, if your sum insured is INR 1 lakh and you are hospitalized for an illness, where your hospital bill amount is INR 75,000, the health insurance company will pay the entire amount of INR 75,000 to you. In case the hospital bill amount is INR 1.25 lakh, the insurance company will only pay you INR 1 lakh, which is your sum insured, and the balance will have to be paid by you.

This is the main reason why it is advised to have a larger sum insured amount. You might have to pay a higher premium for the same but in times of medical emergency; you will not have to bear any expenses out of your pocket. The idea behind the same is to ensure that the compensation is not a monetary benefit for you. You will only be given the amount that you have incurred as an expense during hospitalization. You need to consider your current medical health and your medical history when deciding the amount of sum insured. If you set a small amount as the sum insured, you might have to bear huge expenses in case of a medical illness. However, a higher sum insured also means higher premium payment but it will keep you safe in case of hospitalization. The purpose of health insurance is to reduce the burden of hospital bills and medication costs for you. When you choose a small sum insured amount, you will still have to bear the burden in case the hospital bills exceed your sum insured. Hence, to be on a safer side, it is best to have a higher sum insured amount. A higher sum insured means a higher premium amount but it will be worth it in case of hospitalization as the hospital bills will be covered by the insurance company.