Choosing a suitable health insurance plan may be daunting, especially when you are trying to figure out the ideal sum insured. The sum insured is an important part of your policy, and making it wrong could mean hefty out-of-pocket costs. However, overestimating your needs can lead to paying excessively high premiums.
Sum insured is the highest amount that your health insurer will cover in case of hospitalisation or medical expenses within a policy year. In case your hospital bills are more than this amount, you will be required to pay the extra from your pocket.
For example, if you have a health insurance policy with a sum insured of 5 lakhs and your medical expenses during the year are 4.5 lakhs, the insurer will pay the entire amount. But when your bills increase to 7 lakhs, you will have to pay the additional 2 lakhs out of your pocket. To read more about sum insured, you can visit your insurer's website, such as www.acko.com for ACKO Health Insurance customers.
Here is why this number matters more than you might think:
● Medical inflation is increasing: A surgery that costs 2 lakhs today may easily reach 3.5 lakhs in a few years.
● Avoiding underinsurance: Selecting a low sum insured may make the premiums affordable, but it will not be of much use in case of a serious medical emergency.
● Peace of mind: A properly calculated coverage amount enables you to concentrate on healing rather than money.
There is no one-size-fits-all answer, but a few guiding principles can help:
● Metro cities: Healthcare is more expensive in cities like Mumbai, Delhi or Bangalore. It is usually recommended to have a sum insured of 10-15 lakhs.
● Tier-2 or Tier-3 cities: Medical expenses are comparatively cheaper, and 5-10 lakhs of coverage can be adequate.
● Less than 30 years old and healthy: 5-10 lakhs will do.
● Middle-aged (30-45): 10-20 lakhs must be selected, especially when there is a family history of lifestyle diseases.
● Seniors (45 and over): Consider a sum insured of 15 lakhs or more because of increased risks of hospitalisation.
When buying a family floater policy, ensure that every member is well-covered.
● Case: A family of four (2 adults and 2 children) would preferably require a policy with a sum insured of at least 20-25 lakhs.
● Choose a higher sum insured in case you have a sedentary lifestyle, travel a lot, or work in a high-risk environment.
● Individuals with pre-existing conditions such as diabetes, hypertension, or asthma ought to consider a higher coverage as well.
In case you are on a tight budget, yet you want to have good coverage, here are some tricks:
● Top-up or super top-up plans: These are plans with greater coverage at a reduced cost after a deductible is reached.
● Family floater plans: Cheap when your family members are relatively healthy.
● Select newer insurance plans: Some newer plans, such as ACKO Medical Insurance plans, offer flexible benefits, good digital support, and competitive rates.
● Choosing the cheapest plan: Low premiums may mean low coverage and higher out-of-pocket costs.
● Overlooking sub-limits: There are policies that restrict the amount that can be claimed on certain treatments.
● Not reviewing your plan on an annual basis: Life changes, income increases, and medical expenses do as well. Update your policy once a year.
The optimum amount of sum insured under a health insurance policy is based on your age, health, location, lifestyle and family size. There is no standard number, but a careful guess now can save you lakhs later. Insure against the worst case and not the most probable.
In case of budget limitation, begin with what you can afford and upgrade in the future. You may be fit and healthy at the moment, but an accident or illness can turn everything upside down. It is not only prudent to be prepared, but it is necessary.
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