How Important to select right Sum Insured in Health Insurance?

The primary question for the person taking the insurance is, what is sum-insured under health insurance?

We also must understand the meaning of Sum insured before going into any details.

Sum Insured meaning:

The highest amount an insurance company can pay the policyholder in the event of any damage or loss caused by him is described as the insured amount.

The Sum insured represents the highest amount for the year your Insurance Company can pay in case of hospitalization.

It is based on an indemnity principle. It will compensate you for any loss that results from the harm you cause. This means that you will receive compensation for injury, damage, or loss that you have suffered.

Sometimes, they also refer to it as the maximum health insurance coverage.

We can also say that should you be hospitalized for reasons of any kind, the health insurance company will reimburse you for the total amount up to the amount insured, provided that it is not specifically excluded from the benefits.

Remember Room Rent also effect your Claim. Check How Room Rent limit work in Health Insurance.

If the actual costs exceed the amount of insurance, the additional amount will have to be paid by the policyholder himself.

Examples 1, Suppose Mr. Suresh has an insurance policy for health that covers a sum of 3 lakhs. Then, he is admitted to the hospital and is charged around 3.6 lakhs.

The insurance company will only pay the amount of 3 lakhs, and the remaining amount will be taken through Mr. Suresh himself. 

Examples 2,   let’s say your sum insurance is 5 lacs, and you’re hospitalized twice within 12 months. The first time, the hospital bill was 2.70 lac. In the second, your hospital’s bill total is 3.5 lacs. So the total cost of your hospitalization in the entire year amounts to 6.2 lacs. The insurance company will cover only 5 lacs from this amount. The remaining 1.2 lacs have to be cleared by the policy holder.

So, it’s always advised to have a large insured. But, it could mean paying a higher premium also.

The difference between Sum assured and Sum insured. 

A very technical aspect of the insurance policy concerns the distinction between Sum assured and Sum insured.

These may appear like they’re the same, but they’re entirely different in reality.

Sum Assured

  • The Sum assured represents the set amount that will be paid in the absence of an occasion.
  • Sum assured is a clause typically found on life insurance plans.
  • The Sum Assured is a financial benefit paid to the insured and their family members when the policy’s duration is over.

Sum Insured

  • Applicable for non-life insurance plans such as home insurance, motor insurance, health insurance, etc.
  • The Sum insured is the maximum amount to be paid out in the event of a specific incident.
  • It’s built on the concept of indemnity. It is a way of remuneration or compensation for loss or damage
  • There isn’t any financial reward or reward, and the amount of reimbursement is according to the amount of insurance.

The importance of a reasonable sum Insured: 

It offers you security in the sense that should something happen to you in the present, you can rest assured that your life savings will not be exhausted by treatments.

You’ll be left with a bit of money to get through the retirement life.

A good amount of money insured is essential when you’ve chosen a Family Floater insurance policy that covers family members.

If something happens multiple people in the family, it could be a major issue in the crucial in terms of finances within the family.

Choose the Right Sum Insured for your Health Insurance Policy

It is crucial to select the correct amount insured in your policy. Think of this scenario.

 You have just purchased an insurance plan for health care that provides coverage for various diseases or treatments.

There comes a time when you’re facing an emergency medical situation, and the cost is too high for you to bear.

You submit a claim, and then you’re shocked to discover that the amount of money that the insurance company pays doesn’t provide all of the medical expenses!

That means you’ll need to shell out a large amount of money from your pocket and use your savings.

The Age Factor

 Age plays a major part in determining the amount of insurance. If you become older, there is a greater chance of developing the disease, increasing the requirement for a more significant sum of money insured. 


Get married, or plan to have a baby and have a child, you might require an increase in the amount of insurance you are insured.

 If you are insuring all family members in the same policy, it is required to pay an increase in the amount of insurance.

Health status at present

If you have health issues or have a family history of hereditary diseases in the family, you may want to consider having a more significant amount of insurance.


What we are already aware of is that stress is responsible for more harm than any other. In addition, many jobs require stress-inducing work, while some may make you more susceptible to contracting a specific illness.

These factors are considered when deciding on the amount of insurance.

Can You Increase Your Sum Insured?

There are many ways you can increase the amount covered:

When it comes to Time of Renewal –

When you renew your health insurance plan, ask your insurance provider to increase the amount of insurance to the amount you want. (Remember that this could raise your premium a little)

Through Cumulative Bonus (NCB) –

Certain insurers will increase your insurance coverage by a predetermined amount every year that is not a claim-free one.

Purchase a top-up plan –

You may also purchase a top-up plan or a super top-up policy from your insurance company to receive coverage in addition to your existing SI.


Pick the best Sum insured to get the most out of the insurance policy. Be conscious and make an informed choice for the future.

The principal purpose behind Health Insurance is to provide insurance coverage for financial needs if you have an illness to ensure that your savings are secured.

A low sum insured is not in line with this purpose and can reduce all or a large portion of your savings if the need arises for medical assistance.


The health insurance policy is based on the principle of indemnity.

That means that an insurer is accountable for any damage or loss suffered by the insured. But, the insured does not receive any benefit under this policy.

This insurance policy aims to lessen expenses associated with medical expenses and hospitalization expenses from the head of the policyholder.