People who are new to the world of insurance may not understand the various health insurance jargon. They may get confused while buying the policy and end up making a wrong decision. For instance, lots of first-time policy buyers do not know the meaning of the term ‘sum insured’. If you are one of them, know everything about sum insured and its importance.
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Sum insured refers to the maximum amount that the policyholder can claim under a health insurance policy in a policy year. It is the maximum amount that the insurance company pays to the policyholder in a policy year in case one or more claims are filed due to a medical emergency or for the treatment of an illness.
When a claim is filed, the insurance company assess the coverage available under the policy and pays the claim amount up to the sum insured limit. If the claim amount is more than the sum insured, then the additional amount is paid by the insured. The insurance companies do not pay for medical expenses beyond the sum insured limit.
For example, suppose you have a health insurance policy with a sum insured of Rs 10 lakh. During the policy year, you raised the first claim for Rs 7 lakh. Since the claim amount is less than Rs 10 lakh, the insurer will pay the entire claim amount. A couple of months later, you file another claim for Rs 4 lakh. In this case, the insurer will pay only Rs 3 lakh to you as your sum insured limit will be exhausted. Hence, you will have to pay the remaining amount of Rs 1 lakh on your own.
Here are some of the reasons why choosing the right sum insured for your health insurance policy is important:
Take a look at the factors that you must keep in mind while choosing the right sum insured for your health insurance policy:
You can increase the sum insured of your health insurance policy in the following circumstances:
Sum insured is one of the most important components of health insurance. It helps you to opt for sufficient medical coverage that ultimately safeguards your lifelong savings. However, the higher is the sum insured, the higher will be your premium amount. Hence, you must keep the above-mentioned factors in mind while determining the right sum insured for your policy.
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