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There is a guarantee that your family will get the full cover amount in the event of the occurrence of a certain covered event when we discuss life insurance plans or critical sickness insurance plans. It is known as sum assured. For instance, if you bought a term insurance policy for INR 1 crore and died during the policy’s term, your family would receive the INR 1 crore sum promised.
In contrast, the coverage is stated as a sum insured in health insurance. Now, let’s take a step back and first study a little bit about health insurance before we get into the specifics of what the sum insured is and how it functions.
What Is Health Insurance And Does It Work?
All of the costs associated with your hospitalization are paid by your health insurance plan. It covers your lodging expenses, the price of your surgery, the doctor’s fees, the cost of post-surgical care, etc. This is often a yearly contract that is continuously renewed (but it might be a 2-3 year deal).
However, a health insurance claim operates on an exceptional basis.
The idea of insurance means that the plan will only cover the costs that are incurred, not the full amount you have access to. Let’s use an example to better comprehend this.
Let’s say you have a 20 lakh rupee health insurance coverage. You experience an accident for which surgery is necessary. Surgery and hospitalization have a combined cost of INR 2 lakhs. Your health insurance won’t give you the whole INR 20 Lakhs cover amount that is available in this case; instead, it will only give you an indemnity cover of INR 2 Lakhs (after taking other terms and circumstances into account).
How it is different from a critical illness cover or a term insurance cover?
Whether a policyholder purchases health insurance or critical illness insurance depends on their current medical condition. Because medical emergencies can happen at any time, it’s important to think about having a diverse portfolio of health insurance. This will enable a full financial backup in the event of a medical emergency.
Now, if you subsequently have another serious illness, the insurance will no longer cover it.
For instance, you buy a critical illness policy and discover that you have kidney disease (that is listed in your policy). You will receive money thanks to your critical sickness insurance. Your critical illness insurance will close as soon as this occurs and become worthless.
A health insurance policy, on the other hand, enables you to submit numerous claims for numerous legitimate events throughout your lifetime. You may submit as many claims as you like in a given year, up to the amount of insurance coverage that remains.
What is the sum insured?
The sum insured is the annual amount of money that is yours to use for hospitalization costs. It is the most your insurance provider will spend on hospital bills in a given year. You will be responsible for covering any additional costs if your hospitalization costs are greater than the insurance coverage.
Does The Sum Insured Expire Once Use?
You have health insurance coverage worth Rs. 5 lakh, for instance. After a few years of paying the premiums, you need surgery and are hospitalized for a year, using up the entire Rs 5 lakhs. Now that the full sum insured has been used up, if you need another hospitalization during the same year, you will need to pay the costs out of your own pocket (unless your insurance policy has a restoration benefit option).
Let’s say you will require hospitalization the following year. If you renew your insurance, you will receive a fund of Rs. 5 lakhs once again to assist you with hospitalization costs because the money insured is revoked every year. As a result, you will receive the sum covered each year as long as you renew your health insurance policy and pay the premiums on time.
Factors to help you calculate the right sum insured for your policy
Here is a list of criteria that can assist you in choosing the appropriate sum covered for your health insurance policy.
1)Type Of Health Insurance Plan
You have a variety of options when it comes to health insurance plans on the market. Individual plans, family-floater plans, employer group plans, critical sickness plans, etc. are all available. As a result, the type of plan you select will determine the amount protected under your health insurance coverage. For instance, when more people are covered by a single policy under a Family-floater than an Individual Plan, the total amount insured may be a little higher.
2)Health History And Age Of The Insured
Some people may have chronic conditions like asthma or diabetes that require ongoing medical care. If you or a member of your family who is covered has a chronic medical condition, you must choose a greater sum insured. Another factor in this is the insured person’s age. If the elderly are covered by your health insurance, you might want to choose a bigger sum insured. People who are older may need more medical care than people who are younger.
3)Quality Of Medical Facilities In Your Area
Advanced medical care may be offered in some areas, particularly cities, but it may cost more there than elsewhere. You can determine if you require a policy with extra coverage by keeping this in mind as you choose the sum insured amount.
4)Number Of Members Covered
As opposed to individual plans or senior citizen policies, some plans, such as family-floater and employer’s group plans, provide coverage for a greater number of covered people. Based on the number of persons the plan is designed to protect, choose the sum insured. This will provide you some flexibility to use the money insured for any medical emergencies that may arise throughout the term of the insurance. A lower insured amount may be exhausted after a few claims. This may result in higher out-of-pocket costs for you.