Most often, the jargon involved in health insurance can be confusing for most people, especially if it’s their first time purchasing a health insurance plan. However, you must familiarise yourself with these terms since they can help you get better benefits and coverage for you and your family. It can also help you utilise the benefits of health insurance much better.
The most common term you will come across will be “Sum Insured”. Knowing the meaning of sum insured in health insurance will help you select the right amount of coverage you and your family need when purchasing a plan.
What Is Sum Insured In Health Insurance?
The sum insured is the maximum limit up to which your insurance provider will pay the medical expenses covered under your health insurance in a policy year. It’s the maximum coverage your insurance provider will offer for your policy if your claim is approved.
So when you file a claim, the insurance company checks the coverage available under your plan and pays the amount up to the sum insured limit. If the claim amount exceeds the sum insured limit, the policyholder pays the additional or remaining amount.
So your insurance company will only pay up to the sum insured limit for any medical expenses covered under your plan.
For example, you have a health insurance policy with a sum insured of ₹10 Lakhs. During the policy year, you raise a claim of ₹8 Lakhs. Since it’s within the sum insured limit, the insurer pays the amount.
A few months later, you raised another claim, this time for ₹3 Lakhs. This time the insurer pays ₹2 Lakhs from your remaining sum insured limit, and the remaining ₹1 Lakh will need to be paid out of pocket by you.
What is the Right Sum Insured For My Online Medical Policy?
When choosing your sum insured, a few things would be your age, current health condition, lifestyle, city of residence and the type of plan when buying health insurance online. These factors play a huge role in determining your sum insured amount.
For example, the higher your age, the more likely you are to fall sick often, so the sum insured amount should be higher. Your current health condition can also increase or decrease this amount. If you have a pre-existing condition, you may need regular treatments and hospitalisation, which will require a high sum insured amount.
Furthermore, your lifestyle and city of residence can affect your medical expenses. Healthcare facilities are more expensive in larger metropolitan cities, and leading a hectic lifestyle can increase your chances of falling ill. Health insurance plans from Tata AIG consider these factors and provide suitable plans for their clients on a case-by-case basis.
Lastly, the plan type also matters. If you are only planning on getting an individual plan for yourself, then a lower amount will do. However, for a family health insurance that insures multiple people, you’ll need a higher sum insured amount is recommended.
Difference Between Sum Insured And Sum Assured In Health Insurance
The sum assured is a fixed amount decided between the insurance provider and the policyholder. The meaning of sum assured in health insurance may sound similar to the definition of a sum insured amount. However, the difference here is that the sum assured is a lump sum amount. So the insurance provider will pay the amount in full when a medical event covered under the policy occurs.
On the other hand, the sum insured amount is used as a contingency to cover major medical events. You can use this amount to cover treatment costs or save a portion for any dependents. You can also use this amount however you wish, as the insurance provider pays it all at once.
The following table will make the difference between the two terms clearer.
|Sum Insured||Sum Assured|
|Multiple claims can be made until the amount gets exhausted.||The whole amount is paid against a single claim. It’s a lump sum payout.|
|The sum insured can only be used to cover expenses lost against an insured medical event. ie. Medical treatments and expenses covered under health insurance plans.||This is a fixed benefit and can be used however the policyholder wishes when the insured event occurs.|
|The sum insured is not a maturity benefit.||Sum assured can be a maturity benefit in some cases under the category of health insurance, like life insurance.|
|Generally, the sum insured is paid out in health insurance or non-life insurance policies.||Generally, the sum assured is paid out in life insurance/term life insurance policies.|
There you have it. Hopefully, you now have a better understanding of what a sum insured amount in health insurance is. Remember, the sum insured and the sum assured are not the same and should not be confused. So the next time you buy a health insurance plan online, you will have a better idea of how much coverage you will need.