Home Business Insights & Advice Decoding health insurance: Understanding the term ‘Sum Insured’

Decoding health insurance: Understanding the term ‘Sum Insured’

by Sarah Dunsby
5th Oct 23 2:36 pm

When exploring health insurance policies, one term that often comes up is ‘sum insured’. Understanding the concept of the sum insured in health insurance is essential for making informed decisions about your family health insurance coverage.

What is the sum insured?

Sum insured refers to the maximum amount of coverage provided by a health insurance policy. It represents the total limit up to which an insurer will pay for eligible medical expenses incurred by the policyholder during the policy period. In simpler terms, it is the maximum amount that the insurance company will reimburse or settle for a claim.

What does family sum insured mean?

A family sum insured means, the maximum amount of money that an insurance policy will pay out for medical expenses or other covered benefits for all members of a family who are covered under the policy. Instead of having individual coverage limits for each family member, a family sum insured provides a single pool of funds that can be used by any family member covered by the policy.

Determining the sum insured

The determination of the sum insured depends on various factors, including individual requirements, age, health condition and affordability. While a higher sum insured provides greater financial protection, it also results in higher premiums. Conversely, a lower sum insured may lead to out-of-pocket expenses in case of significant medical treatments or hospitalizations.

Factors to consider when choosing the sum insured

It is important to consider below mentioned factors while choosing the sum insured for health insurance plans for family:

  • Medical inflation

A sum insured that seemed sufficient a few years ago may not cover the rising medical expenses today. Healthcare costs are rising rapidly due to medical inflation. It is essential to consider the impact of inflation when selecting the sum insured. Therefore, it is advisable to opt for a sum insured that accounts for future medical inflation.

  • Individual and family needs

If you have dependents or elderly parents, you may require a higher sum insured to cover their medical expenses adequately. Consider your individual healthcare needs and those of your family members. Take into account factors such as pre-existing conditions, anticipated medical procedures and the medical history of family members.

  • Geographic location

If you reside in a metropolitan city where medical expenses are generally higher, you might need a higher sum insured to cover the increased costs. The cost of healthcare services varies across different regions and cities.

  • Lifestyle and risk factors

If you engage in high-risk activities or have a family history of certain diseases, it is advisable to have a higher sum insured to mitigate potential health-related risks. Your lifestyle choices and risk factors should also be considered when determining the sum insured.

  • Affordability

Assess your budget and premium affordability before finalizing the sum insured. While it is crucial to have adequate coverage, it is equally important to choose a sum insured that you can afford. Remember that premiums increase with higher coverage.

Reviewing and modifying the sum insured

Life events such as marriage, the birth of a child or an increase in income may warrant a revision of the sum insured to ensure adequate coverage for your changing needs. It is recommended to review your health insurance coverage periodically and adjust the sum insured as needed.


Understanding the concept of the sum insured is crucial when purchasing health insurance. Regularly review and modify your sum insured to ensure that your health insurance coverage aligns with your evolving needs. By selecting an appropriate sum insured with kotak general insurance, you can have adequate financial protection against medical expenses.

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