What Is Sum Insured in Health Insurance?

Health Insurance

In today’s world, health insurance is a need. A thorough health insurance policy is something that safeguards you and your loved ones against unforeseen medical costs that may significantly deplete your funds. However, it’s crucial to get health insurance coverage only after thoroughly reviewing the terms and definitions.

The sum insured is one of the key concepts of your health insurance. Therefore, it is crucial to understand what the sum insured is and how it affects your health insurance coverage.

What is sum insured in health insurance?

In the context of health insurance, “sum insured” refers to the maximum amount an insurance provider will pay if you require hospitalization within a specified year. This amount is not considered compensation, but rather a reimbursement of your medical expenses incurred during a medical emergency, such as a hospital stay, whether the hospitalization is cashless or not.

For example, if you or your family gets hospitalised due to some ailment, the cost would include the room rent, tests and cost of procedure, doctor visits and medicines among other things. If the total cost comes up to Rs.2 Lakhs and the sum insured is of Rs.4 Lakhs, your policy would cover the cost.

Any amount that exceeds the insurance limit is your responsibility to pay. However, the insurance provider may cover the entire expense if the medical bills or hospitalisation expenses are less than or equal to the covered amount. The concept of the sum insured is based on the indemnity principle, which states that the insurance provider pays for losses or damages.

What effect does the sum insured have on the health insurance premium?

The amount of coverage you choose directly impacts your health insurance premiums. In the context of health insurance, the maximum amount that can be covered in a year for any unforeseen event is commonly referred to as the “sum insured.”

Why choosing the correct sum insured is important?

Selecting an appropriate sum insured is crucial to ensure your health insurance coverage is comprehensive and can provide financial protection for you and your family during medical emergencies. Choosing an improper or insufficient sum insured may defeat the primary objective of a health insurance policy.

What is health insurance if it cannot fulfil your entire need during an emergency. Imagine, for instance, that you made the correct choice to get a health insurance policy and are now at ease because you are aware of your financial security. But when a medical emergency leaves you with a hefty hospital bill, you realise your health insurance’s maximum payout is insufficient to cover the costs. In the end, you have to pay the fees out of your pocket, which adds to your already stressful emotional situation.

Therefore, it is important to choose an insurance sum large enough to cover your medical costs completely. Check out the health insurance premium calculator to learn how your premium payment is affected by the choice of the sum insured.


It is essential to have a good understanding of health insurance and key terms like “sum insured” to ensure you choose an appropriate amount that meets the needs of you and your family. While a larger sum insured may come with higher rates, it can relieve financial stress during a difficult time. With healthcare costs constantly rising, opting for a higher sum-insured is vital. Therefore, it’s crucial to choose your health insurance policy wisely.

“As Insurance is a matter of solicitation its recommended to obtain complete information about the exclusions, benefits, terms & conditions and limitations of the insurance. Kindly carefully go through the sales policy/brochure before opting for any Insurance.”