What does Sum Insured mean in health insurance?

An insurance policy consists of several clauses that might seem tricky, especially if you’re new to this. But don’t worry if some clauses confuse you! It’s totally okay. The important thing is to talk to your insurance company and ask questions. They’re there to help you understand everything, so you can make the best choices for yourself.

A common term you’ll find in health insurance policies is the ‘sum insured’. This is a really important term! Before you dive into all the details of a health insurance plan, it’s important to know what the sum insured is and why it matters. Let’s break down what the sum insured actually means.

What exactly is the Sum Insured in health insurance?

In health insurance, the sum insured is like the maximum help your policy can give you if something goes wrong. The clause of the sum insured is mostly used in general health insurance plans. Let’s check out with an example-

Here's an example of the sum insured in health insurance.

Let’s say Mr. Akhil Sharma got a health insurance plan with a sum insured of INR 6 lakhs. If he goes to the hospital and the bill is INR 4 lakhs, his insurance will cover it (except the uncovered charges). But if he needs to go again and the bill is INR 3 lakhs, the insurance will only cover INR 2 lakhs because that’s what’s left in his insured amount. Akhil will need to pay the remaining INR 1 lakh himself.

Akhil’s insurance covers up to INR 6 lakhs total. That’s the most he can get, no matter how big the bill is. If the bill goes over that amount, Akhil will need to pay the extra from his own money. In this case, since the bill surpasses the insured amount, Akhil will have to cover the extra amount himself.

How does the Sum Insured affect the Cost of the Premium?

When it comes to health insurance, the amount you’re covered for (the sum insured) really impacts how much you pay. If you choose a higher coverage amount, your premiums will likely be higher too. It’s like getting more protection, but it can mean paying a bit more each time for your insurance.

The sum insured in health insurance sets a limit on how much the insurance will cover each year for unexpected events. If you have a higher sum insured, it means the insurance company can pay more when you make a claim. However, having a big sum insured often means paying a higher premium because it’s a bigger risk for the insurance company. If you ask for more coverage, it could mean they have to pay out more if something happens, so they might charge you more for the policy.

Advantages of Selecting the Right Sum Insured

Explore the advantages you gain by selecting the correct sum insured:

Stress-free Treatment

When you're getting medical treatment, worrying about paying the bills can be really tough. But if you know you still have enough in your sum insured, it's a relief. You can focus on getting the best treatment without stressing about the money.

Save Your Pocket

When a medical emergency happens and you have health insurance, one big benefit is saving your own money. If you pick the right sum insured, you won't have to use your hard-earned savings to pay for medical bills. It's a way to protect your money when you need it most.

Better Treatment

If your health insurance meets your medical needs, you don't have to settle for less when it comes to treatment. If you still have enough sum insured, you can go to the best hospitals without stressing about the bills. But if your insured amount is lower, you might feel like you have to choose treatment options that aren't as good because you're worried about the costs.

Family Floater Plan

A family floater plan is a health insurance that covers the whole family under one plan. Everyone shares the insured amount, and any family member can use it if needed. If your family is big, it's smart to have a higher insured amount. Picking the right sum insured helps make sure everyone in your family is well protected by the insurance.

Picking the right sum insured for your health insurance is really important. If you don’t have enough coverage when something bad happens medically, your insurance might not be enough. But when you have the right sum insured, you can feel more at ease because you’re financially ready for most emergencies.

What is the Difference between the Sum Assured and the Sum Insured?

Are you confused between a sum assured and a sum insured? They do sound pretty similar, right? But they’re actually not the same. Take a quick look at the table below to see the clear differences and get rid of the confusion.

Sum Insured Sum Assured
It's the maximum amount a health insurance company will give you to cover your medical bills. It's the highest sum of money a life insurance company pays out when someone passes away or when a life insurance plan matures.
It's a term you often hear in general health insurance plans. It's a term you often hear in life insurance plans.
Your health plan covers hospital bills only up to its maximum limit, which is the sum insured. In a life insurance policy, you get the highest amount guaranteed either at the end of the policy or if something happens earlier, like an earlier death, based on what the plan says.
For example, having a sum insured of INR 5 lakh in your health insurance. That amount can cover the medical expenses when you're in the hospital.

So, in this case, the claim amount may vary, ranging from less than the sum insured to a maximum amount equal to the sum insured, contingent upon the actual expenses incurred during hospitalization.

For example, a sum assured of INR 10 lakh is provided either upon completion of the plan tenure or in the case of the policyholder's demise within the policy period.

In either case, the claim you get will be at least the sum assured. And hey, sometimes you might even get bonuses or extra things added to that total claim amount if they apply to your policy.

In health insurance plans, we don’t use the term “sum assured”—that’s only for life insurance. Similarly, “sum insured” is what we talk about in health insurance and other general insurance plans. It’s like each one has its own special term!

What's the best way to Choose the right Sum Insured?

Choosing the right amount for your health insurance coverage is super important. If you end up needing more money during a medical emergency than your insurance covers, it might not be as helpful as you hoped. So, when you’re choosing how much to get insured for, think about these things:

Your Health Conditions

If you have conditions like diabetes, high blood pressure, or heart problems, it's a good idea to go for a higher sum insured in your health insurance plan.

Your Lifestyle

These days, your lifestyle plays a big role in your health and can increase the chances of various diseases.


Getting health insurance in your early 20s or 30s is a smart move because when you're young, the chances of getting many diseases are lower.

Go for a Comprehensive Policy

If you're taking care of your whole family, it's a good idea to go for a comprehensive Plan. This way, everyone gets more coverage for their healthcare needs. You pay one premium to cover all your loved ones at once.

Life Stage and Dependents

As your family's financial responsibilities increase, it's smart to consider increasing your insurance coverage. Here are some quick tips to boost your sum insured, giving you better coverage for medical treatment when you need it.

No Claim Bonus

Lots of health plans offer an NCB or No Claim Bonus. It's like a bonus you get if you don't make any claims in a year. This bonus boosts your sum insured for the next year and can even lower your renewal charges.

Restoration Benefit

Restoration benefit is an additional cover you can add to your health insurance. If you think you might need medical care often, especially with a family plan, it's always better to have this benefit. Why? Well, even if you use up all your coverage, this benefit renews it without charging you more. For example, let's say Ms. Simran Sahni has a coverage of INR 3 lakh. After surgery, she uses it all up. Later, when she needs more treatment, this benefit gives her another INR 2 lakh without any extra cost.

With Restoration Benefit, your health insurance company gives you extra coverage of up to INR 3 lakh at no added cost. But remember, this only happens if you have this restoration benefit in your plan.

Consider getting a top-up or super top-up plan

Getting a top-up or super top-up plan gives you more protection if your hospital bills go beyond your basic coverage. Super top-ups cover all sorts of hospital expenses, including what you spend before and after your hospital stay.


Before picking the right sum insured, think about a few things. If it’s a family plan, figure out how much each family member might need for medical care. Costs can vary based on where you live, so make sure your sum insured matches local medical expenses. Also, remember that for older policyholders, it’s a good idea to have more coverage.