Sum Insured in Health Insurance
Finding it difficult to understand all the terminologies used in insurance, right? You are not alone. We understand that it can get boring and tiring to read the 50 something pages given by most insurance companies. The terminology used is difficult, but also very important for you to understand in and out about your policy. But don’t worry, we’re here to make things simple for you. After all, that's what we stand for. Making insurance simple.
Sum Insured is an important term that will pop up every now and then. After reading this piece, you too can talk fluently about it.
What is Sum Insured?
Sum Insured is the amount that is provided to the insured in an unforeseen event such as a medical emergency, theft, vehicle damage, etc. This amount is not a monetary benefit but merely a reimbursement of the cost that the insured person bears in an event of a loss. All Insurance that is non-life insurance like Home Insurance, Motor Insurance, Health/Medical Insurance, etc provides protection for the sum insured. In case the cost the insured pay is less than or equal to the sum insured, the entire amount is reimbursed by the Insurance company. In case, the amount exceeds the sum Insured, the extra cost is to be paid by the insured. In short, the Sum insured is the compensation paid by the insurer in case of any injury/ hospitalization loss or damage, it is directly based on the concept of indemnity.
Choose the Right Sum Insured for your Health Insurance Policy
It is very important to use the right sum insured for your policy; you know why? Just imagine! You are happy, you made a wise decision on time by buying a health insurance policy, 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 and then you are shocked to know that even after the sum insured paid by the insurer, there is a lot that you would have to pay from your pocket, your savings. Stressful, right? Yes, you were wise, but were you really wise in selecting the right sum insured? And 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 your peace of mind and your savings are intact for the future.
Why is Choosing the Right Sum Insured Important?
Sum Insured depends on a few Factors:
What is Sum Assured?
The second important term often used is, Sum assured. It is the amount you will receive at the end of your Insurance term. 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. In any case, Sum assured is the amount that remains unchanged at the end of the Insurance’s 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 death event of the Insured, the nominee will be given an assured sum of 15 Lakhs.
Difference between Sum Insured and 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.