Sum Insured vs Sum Assured in Group Health Insurance
The two most common terms you may have come across while searching for a suitable group health insurance plan are ‘sum insured’ and ‘sum assured’. These are one of the basic terms used, and understanding these terms is essential before choosing an insurance plan. It is a common ritual to use sum insured and sum assured interchangeably; however, these terms have different meanings.Read more
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Sum Insured in Group Health Insurance
Sum insured is the limit to which the health insurance company will pay for your medical expenses covered under the policy. This is the upper limit or the maximum coverage the insurer will offer for the selected health plan if your claim is approved. Sum insured is based on the concept of indemnity.
Sum insured in group health insurance is the maximum amount the insurance company will pay to each employee in case of a claim raised for medical emergencies. This is the upper limit of the policy coverage, usually for a year. For example, if the sum insured is Rs 5 lakh, employees can make claims up to Rs 5 Lakh in a year. Any claim over and above the sum insured will not be considered.
The sum insured has a direct impact on the group health premiums. With the increasing medical inflation and expenses, a high sum insured is undoubtedly desirable. But, a high sum insured would mean a high premium.
Sum Assured in Group Health Insurance
The second important terminology/ concept to understand is that of the sum assured. Unlike sum insured, sum assured is a fixed amount that an employee receives in case of any medical emergency. This amount is fixed between the insurance company and the policyholder (employer in group health insurance).
In group health insurance, the sum assured is usually a lump sum benefit. It is not commonly used in the context of group health insurance. It is more frequently associated with individual life insurance policies where it represents the guaranteed payout in case of the insured person's death. In the context of group health insurance, the focus is usually on the collective coverage limit (sum insured) for the entire group rather than individual assured sums.
Difference between Sum Insured and Sum Assured in Group Health Insurance
The sum insured and the sum assured determine the level of coverage the employee is eligible for, in an insurance policy, thus making the terms interchangeable. But, as we have highlighted the meaning of both, we understand that they are quite different.
Let us look at a few significant differences between the two:
|Sum Insured||Sum assured|
|Sum Insured is used for policies that are based on the concept of indemnity. That means only the amount of loss or expenses incurred is covered.||Sum assured is a fixed benefit irrespective of expense or loss incurred.|
|One can make multiple claims to the extent of the sum insured, that is, till the sum insured is exhausted.||One gets a fixed lumpsum amount against the claim made.|
|It is used for non-life insurance policies.||It is commonly used for life insurance policies.|
|It is a type of reimbursement||It is a type of maturity benefit|
While the sum insured reimburses the loss, the sum assured acts as a benefit. Both, however, focus on the prime aspect of employee benefit and financial aid during medical emergencies. Understanding the relevance of group insurance and its terms only helps make a more informed decision for the employer.
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