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Sum Insured in Health Insurance

First-time investors can be overwhelmed by the various health insurance terms. Purchasing a health insurance plan without understanding the implications and meanings of these terms can result in wrong decisions. ...Read More

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Sum Insured in Health Insurance

What is Sum Insured in Health Insurance?

What is Sum Insured in Health Insurance?
April 10, 2025

Table of Content

 

The sum insured in health insurance is that maximum amount that the policyholder can claim for medical emergencies in a policy year under the plan. The insurance company settles claims for medical emergencies up to the sum insured, which is determined during the policy purchase. You can exhaust the sum insured with a single or multiple claims. Choosing the right sum insured to align with your needs is crucial to avoid inconvenience during medical treatments. 

When you file a claim under health insurance plans, the insurance provider will settle the claim up to the sum insured. You should bear the differential amount if the maximum claim amount exceeds the sum insured.

For instance, if you have an individual health insurance coverage of Rs. 20 lakhs, the insurer settles claims up to Rs. 20 lakhs if the treatment expenses exceed Rs. 20 lakhs, you should pay the differential amount. 

Those who do not understand what is sum insured in health insurance and fail to obtain adequate coverage will face a financial crisis whenever frequent hospitalisations are required. 

Sum Insured vs. Sum Assured in Health Insurance: Key Differences

The terms in health insurance can be confusing to novices. But understanding the basic terms like what is sum insured in health insurance is critical to obtain the right coverage. 

The sum insured in health insurance is the maximum amount that the service provider pays for the medical expenses covered under the policy. The sum assured is a fixed amount pre-decided during the policy purchase. The insurer pays the entire amount in a lump sum when the medical event occurs. 

The difference between the sum insured and the sum assured is given in the table below:

Sum Insured

Sum Assured

You can make any number of claims until the sum insured exhaustion.

The entire converge amount is released in a lump sum in the first claim.

The sum insured has to be utilised only for the purpose covered. For instance, you can use it only for medical treatment expenses in health insurance.

It is a fixed benefit. When the medical event for which it was purchased occurs, you file a claim, You can use the payout as per your requirements and not restricted to what it is meant for. 

The sum insured is not paid to the policyholder on maturity.

The sum assured can be a maturity benefit depending on the type of insurance, such as life insurance

Importance of Selecting the Right Sum Insured For Health Insurance

Understanding what is sum insured in health insurance is important for the right health plan selection. Besides that, you should consider the following for an informed decision:

  • Make Sure You Have Enough Coverage

The sum insured should be adequate to cover your medical expenses. If the sum insured is lower, you have to incur the differential costs if the claim amount exceeds the sum insured. If you opt for higher sum insured benefits than you need, you unnecessarily pay higher premiums. 

  • Keep Your Savings Safe

With a health insurance plan with adequate coverage, you will not have to disturb your savings during medical emergencies. The sum insured will take care of your treatment expenses, and you can grow your savings instead of depleting it. 

  • Live a Life Without Stress

You can rely on financial protection in health insurance during medical emergencies only if you have chosen the right coverage. You can be rest assured that the medical claim policy will take care of the expenses, and you need not stress about arranging funds.

Key Factors to Consider When Choosing the Right Sum Insured

Comprehending what is SI in health insurance is crucial for the right coverage. You should also understand the factors that impact your decision. They are:

  • Age

Determine the sum insured according to your age. The chance of falling sick is lower when you are young, and you may not need higher coverage. You are more susceptible to developing health issues as you grow older. Opt for a higher coverage as you age. However, the health insurance premium for higher coverage will be higher. 

  • Your Current Health Status

Your current health status impacts the sum insured. Obtain a higher coverage if you have pre-existing illnesses like diabetes, hypertension, thyroid, etc., that require constant medical attention. Also, the chances of developing major health issues due to these conditions are higher, which is another reason to opt for a higher sum insured.  

  • Plan Type

The sum insured depends on the type of plan you choose. Individual health insurance requires a lower sum insured than health insurance for family. Your family floater plan sum insured should be higher as all family members share the coverage. 

  • Lifestyle

The lifestyle you lead has a direct impact on your health. A sedentary lifestyle, stressful jobs, and lifestyle habits like smoking and alcohol consumption can trigger medical issues like hypertension, obesity, diabetes, etc. Factor in these factors before deciding on the sum insured. 

  • City You Live In

The treatment costs depend on the city you live in. The sum insured should be higher if you are living in metropolitan cities where medical expenses can be more expensive than in smaller cities. 

How Does Sum Insured Affect Health Insurance Premiums?

Now that you know what the sum insured in health insurance is, you need to have an idea of how the sum insured impacts the health insurance premiums. Both the sum insured and premiums are correlated. If the sum insured is higher, the insurance companies have to part with a higher amount as the maximum claim amount is higher. Considering this, the premium is higher if the sum insured is higher. 

When Can You Raise Your Health Insurance Sum Insured?

With time, your health conditions also change. If you are physically fit and follow a healthy lifestyle, you may remain healthy even as you age. In contrast, if your lifestyle is not great and you have developed health issues over time, you might have to increase the sum insured. You can opt for a higher coverage:

  • During Policy Renewal

Policy renewal sum insured increase is possible. Every year during renewal you can opt for a higher sum insured depending on specific needs. However, the premium will not remain the same. The premium is higher for a higher sum insured.

  • Using a Cumulative Bonus

You may earn a cumulative bonus for every claim-free year. You can add back the cumulative bonus to the sum insured. The insurance company does not charge a higher premium for increasing the sum insured using a cumulative bonus. 

Why the Sum Insured Matters in General Insurance

The sum insured is the maximum amount you can claim for medical expenses in a policy year. You can use the sum insured in a single claim or with multiple claims. When you use it partially, the residual amount will be available for future claims. This can continue till the sum insured is exhausted or the policy maturity date. 

The sum insured varies depending upon the different types of health insurance and their terms and conditions. A single person or more members can use the coverage depending on the plan chosen. In a family floater plan, all members share the coverage available under a single plan. So, the sum insured should be higher than individual insurance plans. 

Summary

Individuals who buy a health insurance plan without understanding what is sum insured in health insurance face inconveniences during medical emergencies. An adequate sum insured results in a life without stress. You can rest assured that your savings are not intact even during medical emergencies since the insurance company will manage the medical expenses up to the sum insured. 

FAQs on What is the sum insured in health insurance

Q. What does sum insured mean in health insurance?

Sum insured in health insurance means the maximum amount you can claim in a policy for medical expenses in a policy year. If your claim is higher than the sum insured, you have to bear the differential costs. If it is lower, the balance amount will be available for future claims. 

Q. What is the difference between sum insured and assured?

Sum insured is the maximum you can claim for medical expenses during a policy year. You can utilise the entire sum insured in a single claim or can spread it across several claims. The sum insured has to be utilised for the event it covers i.e., for medical expenses only in health insurance. The sum assured is a fixed amount which is pre-determined during the policy purchase. The insurer releases the entire amount in a lump sum when the event occurs. You can use the amount for any purpose apart from the event it is meant for. 

Q. Is it possible to change the sum insured of my health insurance plan?

You can change the sum insured only during policy renewal. No change is permitted during a policy year.

Q. Can I increase the sum insured in health insurance?

Yes. You can increase the sum assured during renewal or with a cumulative bonus earned for a claim-free year.

Q. Is the sum assured paid on maturity?

Yes. Sum assured is paid on maturity depending on the type of policy. Some life insurance plans payout sum assured on maturity.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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1. Annual Premium amount ₹ 1869 for Male aged 35 years, Base Benefit, 10 years term, Regular Pay option, Sum Assured=10 lakhs, excluding Taxes & levies as applicable.

ARN- ED/04/25/22892