People who are new to the insurance industry may be unfamiliar with the numerous health insurance jargon. They may become confused while purchasing the policy and make an incorrect judgement. For example, many first-time policy buyers do not understand what the term "sum insured" means. If you are one of them, you should be well-versed in the concept of the sum insured and its significance.
What is the Sum Insured in Medical Insurance?
The maximum amount that a policyholder is eligible to claim under a health insurance policy in a policy year is referred to as the sum insured. It is the maximum amount that a health insurance company will pay to a policyholder in a policy year if one or more claims are filed due to a medical emergency or disease treatment.
When a claim is submitted, the insurance company evaluates the policy's coverage and pays the claim amount up to the sum insured maximum. If the claim exceeds the sum covered, the additional amount is paid by the insured. Medical expenses in excess of the sum insured are not covered by insurance companies.
Assume you have a health insurance policy with a Rs 10 lakh sum insured. You made your first claim for Rs 7 lakh during the policy year. Because the claim is less than Rs 10 lakh, the insurer will pay the entire amount. You filed another claim for Rs 4 lakh a few months later. In this instance, the insurer will only pay you Rs 3 lakh because your sum insured maximum has been reached. As a result, you will have to pay the remaining Rs 1 lakh on your own.
The Importance of Selecting the Appropriate Sum Insured in Health Insurance
Here are some of the reasons why you should select the appropriate sum insured for your health insurance plan.
Ensure Sufficient Coverage - By selecting the appropriate sum insured, you ensure that you have adequate medical coverage. If you choose a lower sum covered, you will have to pay the difference out of your own cash in the event of a medical emergency. However, if you choose a bigger sum covered than is necessary, you will pay more rates.
Safeguard Your Investments - Health insurance coverage with the appropriate sum insured can help you save your funds. In the event of a medical emergency, your savings will be unaffected because the sum insured will be sufficient to pay your medical bills.
Lead a Stress-Free Life - If you have a suitable health insurance policy, you won't have to worry about organising money in case of a medical emergency. As a result, you will have no financial responsibility and will be able to live a stress-free life.
Things to Consider When Choosing the Appropriate Sum Insured
Consider the following variables when determining the appropriate sum covered for your health insurance policy:
Age - You must select the sum insured for your health insurance coverage based on your age. The more your age, the greater the sum insured. This is because the likelihood of becoming ill and developing a health issue grows with age.
Current Health Condition - When determining your insurance sum insured, you should also consider your current health condition. If you have any pre-existing ailments like diabetes, you should choose a bigger sum insured. This is significant since you will be compelled to visit the doctor on a regular basis, increasing your medical expenses.
Plan Type - When determining the sum insured, consider the type of health plan you want to purchase. If you are purchasing an individual policy to cover yourself, a lower sum insured will suffice. However, if you choose a family floater health plan, you may require a bigger sum insured because the coverage must cover the entire family.
Lifestyle - Your lifestyle should be taken into account when calculating your sum insured. If you live a fast-paced, stressful lifestyle, you are more likely to develop ailments such as obesity, hypertension, and so on. In that scenario, choosing a bigger sum insured is advised.
City of Residency - When determining your sum insured, keep your city of residence in mind. If you live in an urban area, you should choose a bigger sum insured because healthcare services are more expensive. However, if you live in a smaller city, you may be able to select a health insurance plan with a lower sum insured.
In a Glimpse
One of the most significant aspects of health insurance is the sum insured. It assists you in selecting enough medical coverage, which ultimately protects your life savings. However, the more the sum is covered, the greater the premium cost. As a result, you must bear the aforementioned considerations in mind while establishing the appropriate sum covered by your insurance.