The Basics of Health Insurance: Your Policy’s Sum Insured


In today’s world, health insurance is a need. Making an informed selection and making sure you carefully and fully utilise the benefits of your health insurance plan are made possible by understanding the meaning of various insurance terminology. The sum insured is one of the key concepts in relation to your medical insurance. Understanding what sum insured is and how it affects your health insurance coverage is therefore crucial.

What Does the Health Insurance Sum Insure Mean?

The word “sum insured” in the context of health insurance refers to the most that the insurance provider will pay you in the event that you need to be hospitalised within a given year. Sum insured is not a form of compensation. It is a refund of the costs you incur during a medical emergency, such as a hospital stay, whether it be cashless or not. Any amount that exceeds the insurance limit is your responsibility to pay.

For instance, you need to take a look at the amount of what is health insurance that is covered. Let’s say your health insurance coverage has a 5 lakh sum insured. You experienced two medical hospitalisations during a specific year. Your hospital cost for the first visit was 2 lakh rupees, and for the second visit, it was 4.2 lakh rupees. Your total hospital bill was 6.2 lakhs, but the maximum amount covered by your health insurance is only 5 lakhs. In this case, your insurance provider will cover 5 lakhs of your hospital expenses, leaving 1.2 lakh for you to pay out of pocket.

What effect does the amount insured have on the cost of health insurance?

The amount insured, as stated, directly affects your health insurance premiums. The maximum cap on costs that can be covered in a year against any bad event is technically referred to as the sum insured in the context of medical insurance.

Why Is Choosing the Correct Sum Insured in Health Insurance Important?

For your family health insurance plans to be foolproof and able to financially safeguard you and your family from any medical emergency, choosing the appropriate sum insured is essential. The main goal of a health insurance policy could be defeated if the improper or insufficient sum insured is chosen.

Choosing the appropriate sum insured is based on the following considerations:

  • Age: Young people should opt for a bigger sum insured because they can readily get one at reasonable prices.
  • Health condition: It is advised to choose a bigger sum insured if you have health conditions like diabetes, heart disease, high blood pressure, kidney problems.
  • Current Life Stage: Because of the growing financial duties of dependents, you should think about increasing your sum insured if you have a family, plan to get married, or are thinking about having children.

The difference between the insured and uninsured amounts

Most consumers mistakenly think that sum insured in a health insurance policy means sum assured. Both phrases have distinct meanings. If the insured event occurs, the policyholder will get the sum promised, which is a predetermined amount. For instance, if you get life insurance, the insurance provider promises to pay a certain amount to your designated beneficiary incase of an unfortunate incident. The sum assured is the amount that will be paid to the nominee when the covered event occurs.


In general, be aware of the significance of key terminology in health insurance, including “sum insured,” and make sure the amount you select is appropriate for your requirements and the needs of your family. Although a bigger sum insured entails higher rates, it spares you the financial strain during a trying emotional moment.

Subscribe to Bajaj Allianz General Insurance Company YouTube Channel.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.