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What is Sum Insured (SI) in Health Insurance & How it Works?

Are you finding it difficult to understand all the complicated terms and jargon used in health insurance? Don’t worry you’re not alone. We understand that it can be trying to read 50-something page insurance documents.

But don’t worry, we’re here to make insurance simple for you. We can help you be prepared with some important terms you need to know before buying health insurance.

And one important term you must know is Sum Insured.

What is Sum Insured?

Sum Insured (SI) is the maximum amount that is provided to you (the insured) in case you make a claim due to a medical emergency, treatment for illness, etc. It is directly based on the concept of indemnity. So, when you make a claim, you will get a reimbursement of the costs spent on the medical treatment.

If the cost of the treatment is less than or equal to the sum insured, the entire bill amount will be covered by the insurance company.

But, in case the costs of treatment or hospitalization exceed the sum insured, you will have to bear the extra cost beyond the SI yourself.

In short, the sum insured is an indemnity-based reimbursement you can get in case you make a claim with your health insurer.

All non-life insurance like health insurance, home insurance, motor insurance, etc. offers this sum insured.

Can You Increase Your Sum Insured?

There are many ways that you can increase your sum insured:

At the Time of Renewal – When you renew your health insurance policy, just ask your insurer to increase the sum insured to the desired amount. (Remember that this will also increase your premium slightly)
Through Cumulative Bonus – For every claim-free year, some insurers will increase your sum insured by a certain amount. With Digit’s Comfort Plan, on every claim-free year, your SI will increase by 100% (up to a maximum of 200% max)!
Get a Top-Up Plan – You can also opt to buy a top-up or a super top-up plan from your insurer to get coverage over and above your original SI.

Choose the Right Sum Insured for your Health Insurance Policy

It is very important to use the right sum insured for your policy. Just think of this example. You just bought a health insurance policy that covers a lot of illnesses and treatments, and you are happy that you have protection. Then comes a situation when you are in a medical crisis and the expenses are too much for you to handle.

You make a claim, but then you are shocked to find out that the sum insured paid by the insurer doesn’t cover all of your medical expenses! This means that you would have to end up paying a lot from your pocket and spend all your savings. Stressful, right?

Yes, you did right in buying a health insurance, but were you really careful in selecting the right sum insured? The answer is no. It is very important to choose the right sum insured to avoid such situations and to let your insurer pay the maximum amount in case of a claim. This way you get some peace of mind, and your savings are intact for the future.

Why is Choosing the Right Sum Insured Important?

A lower sum insured will mean a lower premium, but you will end up paying for it later. Thus, a higher sum insured will increase the amount you have in case of an emergency.
Having a good sum insured amount will help you in keeping your savings intact.
Knowing that you have financial protection will mean less stress in medical emergencies.
If you have a family floater plan, having a higher Sum Insured is especially important. This is because your family shares the Sum Insured of your health plan, in case of multiple claims in the same year a lower Sum Insured would not be sufficient. If you opt for a higher Sum Insured, you can be assured that your family members would be sufficiently covered.

Sum Insured depends on a few Factors:

Decide what amount is right for your sum insured based on the following factors:

Age and Life Stage – When you get older, or you get married, or are about to have a child, you may need a higher sum insured.
Dependents – When insuring all the members of the family under a single policy, it will require a higher sum insured.
Health Conditions – If you suffer from any health conditions or have a history of hereditary disease in the family you should consider a higher sum insured.
Lifestyle – If you live a more stressful or fast-paced lifestyle, or you enjoy extreme sports and other activities, you may be at a higher risk of falling ill and need to cover yourself better.

What is Sum Assured?

A second important term often used is, Sum Assured. This is a fixed amount you will receive at the end of term insurance. It is often used in Life Insurance policies.

In other words, the sum assured is the amount you initially signed up for, this is the original amount that’s guaranteed to come to you or your beneficiary. The sum assured amount remains unchanged at the end of your policy tenure, it is a pre-determined benefit that the insured will receive.

For example, a life insurance policy may have the Sum Assured limit as ₹15 lakhs in case of death, which means that in case of a such an event, the person’s nominees will be given an assured sum of ₹15 Lakhs.

Difference between Sum Insured and Sum Assured

Sum Insured	Sum Assured
Sum insured is the value applied to Non-life insurance.	Sum assured is the value applied to Life insurance policies.
It basically is based on the principle of indemnity, that provides a reimbursement/ compensation to damage/loss.	It is that fixed amount that the insurer pays the policyholder in case of an eventuality.
There is no monetary benefit rewarded, its reimbursement as per the Sum Insured.	Sum assured is a monetary benefit that is given to the insured or his/her family after policy’s term is up.

We hope you got a fair idea about the Sum Insured and Sum Assured. Choose the right sum insured to make the most of your insurance policy. Be aware and make a wise decision for your future.

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