There are various technical terms used in insurance that are hard to understand. They might seem easy to pronounce but have complicated explanations. Knowing the terms to avoid fraud while opting for insurance is essential. One of the most common questions asked to policyholders is how much sum insured or coverage is required? So, it is essential to understand the meaning and concept of the sum insured in health insurance.
What is the sum insured?
The sum insured is the maximum amount that an individual or policyholder can get from the insurance company in case of any damage or loss. It is also known as maximum coverage under the policy or health insurance. So, in case if the policyholder gets hospitalized, then the health insurance company will cover the full amount of the sum insured. If the hospital expenses exceed the sum insured, then the policyholder will make the extra or excess payment.
For example, if Sahil has a health insurance policy with a sum insured of INR 5 lakhs, his hospital bill is INR 3.8 lakhs. The health insurance claim will get approved. Let’s assume he met with an accident and has to go back to the hospital again. This time the bill is INR 2 lakhs. The company will only provide INR 1.2 lakhs, and the policyholder will bear the remaining amount.
How to choose the sum insured for yourself?
Various factors come under while deciding the sum insured. Some of the essential elements are as follows:
Age plays an essential role while deciding on the sum insured. As you age, the probability of falling sick increases, and it gets necessary to have a sum insured that offers you complete insurance cover. Hence, it is safer to say that the earlier you start, the better it will be for you.
Our lifestyle is another important factor to determine the sum insured. Stress causes more harm these days considering our lifestyle and choices. A lot of jobs also cause stressful situations, whereas others might put you in a riskier situation and the chances of getting a specific disease will increase. So, these pointers must be taken into consideration while deciding the sum insured.
One of the essential factors in deciding the sum insured is an individual’s health. All individuals must go through their medical history and a regular check-up to know about their health properly. If the policyholder or the family members have an account of medical diseases, the sum insured must be enough to cover their expenses.
Importance of Sum Insured
There are various benefits and importance of sum insured. Some of the points are listed as follows:
- Sum insured provides a sense of security for an individual and their families. You don’t have to worry about the hospital bills in case of any uncertain death or disease. If you have a good sum insured, it will cover all the hospital bills.
- It also helps you save your savings. You are not required to exhaust all your savings in case of an accident or health disease and you can use your group health insurance cover for all the bills.
- Financial security helps you keep away from all the stress. It reduces your stress and helps you live a secure and safe life.
- If you have an adequate amount of sum insured, it can cover your opted family members or immediate family and help you live a better life.
How does sum insured impact the premium amount?
Sum insured allows an individual to cover the maximum damages that occurred in any case of accident or unforeseen event. The higher the amount of sum insured is, the higher an insurance company will have to pay in case of any damage or uncertainty. Hence, it increases the insurance premium amount that is to be paid for the sum insured.
To conclude, we can say that sum insured is the maximum amount that an individual or policyholder can get from the insurance company in case of any damage or loss. It is also known as maximum coverage under the policy or group health insurance. So, in case if the policyholder gets hospitalized, then the health insurance company will cover the full amount of the sum insured. Click here to see all features of group health insurance
1: Will the insurance company pay if the hospital bills or damages are more than the sum insured?
No, the insurance company will not bear the excess amount or damage. If the hospital expenses or other damages exceed the amount of sum insured, then the extra or excess payment will be done by the policyholder.
2: What factors are essential to decide the sum insured?
The factors that help an individual or a policyholder to decide the sum insured include age, health history or medical records, and lifestyle of a person.