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Sum Insured in Health Insurance: Meaning & Importance
People who are new to the world of insurance may not understand the various health insurance jargon. They may get confused while buying the policy and end up making a wrong decision. For instance, lots of first-time policy buyers do not know the meaning of the term 'sum insured'. If you are one of them, know everything about the sum insured and its importance.
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- Sum Insured in Health Insurance: Meaning & Importance
What is the Sum Insured in Health Insurance?
Sum insured (SI) refers to the maximum amount that the policyholder can claim under a health insurance policy in a policy year. It is the maximum amount that the insurance company pays to the policyholder in a policy year in case one or more claims are filed due to a medical emergency or for the treatment of an illness.
When a health insurance claim is filed, the insurance company assess the coverage available under the policy and pays the claim amount up to the sum insured limit. If the claim amount is more than the sum insured, then the additional amount is paid by the policyholder. The insurance companies do not pay for medical expenses beyond the SI limit.
For example, suppose you have a medical insurance policy with a sum insured of ₹10 lakh. During the policy year, you raised the first claim for ₹7 lakh. Since the claim amount is less than 10 lakh, the insurer will pay the entire claim amount. A couple of months later, you file another claim for ₹4 lakh. In this case, the insurer will pay only ₹3 lakh to you as your sum insured limit will be exhausted. Hence, you will have to pay the remaining amount of ₹1 lakh on your own.
Importance of Choosing the Right Sum Insured in Health Insurance
Here are some of the reasons why choosing the right sum insured for your health insurance policy is important:
- Ensure Sufficient Coverage – By choosing the right sum insured, you ensure sufficient medical coverage for yourself. If you opt for a lower SI, you will have to pay the additional amount during a medical emergency from your own pocket. But if you opt for a higher sum insured than required, then you will unnecessarily pay expensive premiums.
- Protect Your Savings – A health insurance policy with the right sum insured helps you to keep your savings intact. When you face a medical emergency, your savings will remain untouched as your sum insured will be sufficient to cover your medical expenses.
- Lead a Stress-free Life – If you have a health policy with sufficient coverage, you will not have to worry about arranging money in case of a medical emergency. Hence, you would not have any financial burden and would be able to lead a stress-free life.
Things to Keep in Mind While Choosing the Right Sum Insured
Take a look at the factors that you must keep in mind while choosing the right sum insured for your mediclaim insurance policy:
- Age – You must choose the sum insured of your health policy based on your age. The higher is your age, the higher should be the sum insured. This is because the chances of getting sick and developing a health condition increase as the age increases. However, a higher sum insured will attract a higher premium.
- Current Health Condition – Your current health condition should also be considered while choosing your policy sum insured. If you suffer from any pre-existing diseases like diabetes, then you must opt for a higher sum insured. This is important because you will be required to make regular trips to the doctor, and hence, your medical expenses will be higher.
- Plan Type – The type of health plan you choose to buy should also be determined while deciding the sum insured. In case you are buying an individual plan to cover yourself, then a lower sum insured will do. But if you are opting for a family floater health plan, then you may need a higher sum insured or SI, as the coverage should be enough for the whole family.
- Lifestyle – The lifestyle you lead should also be considered while determining your sum insured. If you lead a fast-paced, stressful life, then you are at a greater risk of developing diseases like obesity, hypertension, etc. In that case, opting for a higher sum insured is recommended.
- City of Residence – Your city of residence should also be considered while choosing your sum insured. If you live in a metropolitan city, you must opt for a higher sum insured, as healthcare facilities are expensive in such cities. But if you live in a smaller city, you can choose a health insurance plan with a lower sum insured or SI.
When Can You Increase the Sum Insured of Your Health Insurance Policy?
You can increase the sum insured of your health insurance policy in the following circumstances:
- At the Time of Policy Renewal – When your health policy is due for renewal, you can choose to increase your sum insured. Depending on the increase in your sum insured (SI), your premium amount will also increase.
- Through Cumulative Bonus – The sum insured of your policy can also be increased through the cumulative bonus. This bonus will be granted to you after every claim-free year but without any hike in the premium amount.
FAQs
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Q1. What is sum insured amount?
Ans: The Sum insured (SI) amount refers to the maximum coverage value of your mediclaim policy. In simple words, the sum insured amount is the maximum amount that you can claim from your insurer in a policy year. -
Q2. What is the limit of sum insured?
Ans: The sum insured or SI limit refers to the maximum amount that the policyholder can claim in a policy year from their health insurance company. -
Q3. Can we reduce sum insured?
Ans: Yes. You can reduce your policy sum insured at the time of renewing your health insurance policy. -
Q4. What is minimum sum insured?
Ans: Minimum sum insured (SI) refers to the lowest coverage amount available under a health insurance policy.
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Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in
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**All savings and online discounts are provided by insurers as per IRDAI approved insurance plans. #Tax Benefits are subject to changes in tax laws. GST Exemptions depend on fulfilment of qualification criteria and submission of relevant documents.
*₹1748/month is the starting price for a 1 crore health insurance for an 18-year-old male, with no pre-existing diseases. Discount on renewal premium is subject to the number of wellness points earned in the health insurance policy. For more details about the plans, please read the sale brochure carefully to get upto 100% discount on renewal premium.
*₹400/month is the starting price for ₹ 5 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases
*₹541/month is the starting price for ₹ 10 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases
*₹762/month is the starting price for ₹ 1 Crore Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases
*₹243/month(₹ 8/day) is the starting price for a 5 lakh health insurance for a 20-year-old male, non-smoker, living in Bengaluru with no pre-existing diseases
*₹2020/month is the starting price for ₹ 1 Cr Health insurance for a 50 year old male & 50 years old female, living in Bangalore with no pre-existing diseases rounded off to nearest 10.
*₹390/month (₹13 per day) is starting price for 1 cr. Health insurance for 25 years old male, with pre-existing diseases, residing from tier 1 city rounded off to the nearest 10.
*No medical tests are required unless requested by the insurer’s underwriter. In-case of pre-existing diseases relevant medical proof would be required as per the terms and condition of the policy opted.
*The values taken for effective cost calculation are indicative values and may change as per the selected plan.
*Coverage upto double the amount of Sum Insured is available on certain covers for a minimum plan of Rs. 5 Lakh on the first claim only to an individual of upto 45 years of age with no pre-existing diseases. The benefit is available with or without extra cost depending on the plan chosen.
*Coverage of pre-existing diseases is provided by insurer as per their underwriting policy.
*The scope of coverage may vary from plan to plan.
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