Ever since the COVID-19 pandemic hit, the need for a health insurance policy has presented itself more strikingly than ever. The non-life insurance industry saw a quarterly increase of 47% in gross direct premiums in Q2 FY2021, driven majorly by increased awareness about health protection policies. Besides this recent interest in the insurance market, another intriguing development can be observed. Nowadays, most people in India are going for a health insurance policy with a higher sum assured.

Perhaps this trend stems from the realisation that a high sum assured provides fuller coverage in times of need. It extends the coverage of a policy in the event of multiple expenses. Whether covering for critical illness treatments and advanced surgeries or providing financial help after an untimely demise, plans with a high sum assured are prevailing. This brings us to the pressing need for a high sum assured in health as well as term insurance plans.

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Health Insurance Plans with High Sum Insured

The development of India's steadily growing healthcare sector is due to the efficient services provided by both private and public players. While medical facilities like cardiac surgeries, cancer treatments, transplants, IVF, etc. have become common, it has made direct financial impacts in our lives at the same time. With the rise in illness among the masses, the treatment cost of various illnesses has increased manifold. The cost of a liver transplant today is between 18-22 lacs, while the cost for a lung transplant ranges between Rs 20-25 lacs. Moreover, treatment for cancer costs a minimum of Rs 15-18 lacs and even go beyond Rs 20 lacs. According to the Economic Survey, medical inflation for FY 19 in India stood at 7.14%. The figures indicate the importance of health insurance with an adequate sum insured for an Indian family.

To meet this critical demand, insurers are now offering affordable health insurance plans with coverage worth Rs. 1 crore. These plans are being offered by insurers including Aditya Birla, Care, Max Bupa, Star Health Insurance. Additionally, nowadays health insurance is offered on an EMI basis as well. This makes having health insurance affordable for everyone. For example, now, a Rs 1 crore health insurance plan costs about Rs 916 per month only for a 30-year-old living in New Delhi. Let us understand the utility of a health plan with a high sum insured through an example.

In certain situations, there may be more than one case of hospitalization in your family. This is where having a low sum insured can take a toll on your financial stability. E.g. Jay Rastogi and his wife have a family floater health insurance policy of Rs 6 lacs. Jay was hospitalized for a surgery that cost Rs 6 lacs. His health policy covered all the expenses using the entire sum insured. Then, after a few months, his wife underwent eye surgery that cost Rs 1 lakh. So now, Jay had to bear the cost of his wife's operation as he exhausted his cover during the time of his surgery. Hence, it is essential to have a high sum insured cover that can sufficiently cover medicare for all family members.

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Adequate Cover in Term Insurance

As is known, term life insurance provides financial relief to the family by providing a death benefit after the demise of the policyholder. This is where the question about an adequate sum assured arises. As a general rule of thumb, the sum assured in a term plan has to be 10 times the annual income. Younger people aged between 25-35, are recommended to get term cover with an assured sum worth 20 times their annual income.

For example, if your annual income is Rs 10 lacs, then you must have a term cover of at least Rs 1 crore. Of course, there are several other factors that impact your decision while choosing a sum assured, like age and future prospects. Those who plan on getting married, raising kids, spending on children's education, etc., are looking forward to forthcoming financial liabilities. For a 30-year-old man living in New Delhi, Edelweiss Tokyo’s Total Protect Plus offers term insurance of Rs 1 crore at Rs. 719 per month only. You too can choose from several wholesome and affordable options while getting a term plan with an adequate cover.

Therefore, since bad news never has good timing, it's best to be prepared for what may come. Having sufficient coverage unburdens you financially from the problem at hand. It also protects your savings and keeps your financial stability intact. It means that no unforeseen accidents can fetter the hard-earned money that you've saved for future prospects like marriage, children's education, etc. So going forward, getting insurance with a high sum assured is the way to go.

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