One of the most significant concepts or terms in a health insurance plan is “Sum Insured.” This fundamental concept directly impacts the financial coverage a health insurance policy offers. Understanding the “Sum Insured” will aid in making an informed decision about healthcare coverage.
So, let’s delve into what is the sum insured in health insurance and understand its meaning. We will also look into its effect on your premiums.
How to Choose the Right Sum Insured in Health Insurance?
The term “Sum Insured” means the maximum amount the health insurance company will pay for the medical expenses incurred, provided they are approved. So, the question arises: “How to choose the right sum insured in a health insurance plan?” The following factors will help you decide the right sum insured:
The healthcare costs differ from region to region. The prevailing cost of medical treatment in your region will significantly impact the sum insured. For instance, healthcare costs in Tier 2 cities are lower than those in metropolitan cities in India.
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Medical History and Risk Profile
Individuals with a pre-existing medical condition or a family history of certain ailments may need a higher sum insured to be able to adequately cover the risk of the clinical condition. The insurers assess the risk profile of the applicant to be able to decide the right amount of sum insured.
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Age and Number of Family Members
Age plays an important role in determining the sum insured. Whether you select an individual plan or a family floater will also affect the sum insured.
Lifestyle plays a major role in determining your health condition. Factors such as your occupation, geographic location, lifestyle, and drinking or smoking habits will impact your health and consequently influence the sum insured.
How Does Sum Insured Impact Health Insurance Premiums?
Your healthcare plan’s sum insured impacts your premiums. Let’s look at it closely.
- Coverage Limit: The sum insured determines the maximum amount the insurer will pay for your medical expenses.
- Customisation and flexibility: Health insurance policies offer flexibility in selecting the sum insured based on individual needs, preferences, and budgetary constraints. The policyholders are free to choose the sum insured to meet their anticipated healthcare requirements and budget.
- Cost of Insurance: The sum insured directly impacts the cost of health insurance premiums. The greater the sum insured, the higher the premium and the greater the scope of coverage. On the contrary, a lower sum insured will mean a lower premium but also impose the risk of higher out-of-pocket expenses in case of a claim.
Conclusion
An adequate sum insured will ensure you can avail of quality healthcare at a hospital of your choice without worrying about the financial aspect. Make sure that you are not underinsured. Consult your insurer and select a policy with an adequate sum insured, as it will ensure minimum or no out-of-pocket expenses when you make a claim.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the relevant industry. It is advised to verify the relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.