Why should you opt for a higher sum insured while renewing your health insurance policy?

Ranveer (28-years-old) lives in Hyderabad in a hostel and works in a private company. Ranveer purchased a health insurance policy of R. 3 lakh two years ago. But due to this lethal COVID-19 pandemic over the past one and half years, he felt that his health insurance plans were not giving him adequate coverage against this deadly virus. Thus, he wants to enhance the sum insured amount during the time of renewal to stay protected and worry-free financially. Ranveer and many people also wanted to enhance their sum insured during this global pandemic to increase their safety and security. Now, policyholders are shifting from a sum insured of Rs 3-5 lakh to Rs 25 lakh. Some are even trying to purchase a sum insured of Rs 1 crore to lessen their financial burden during healthcare emergencies.

The health insurance industry is changing drastically over the past one and half years. This menacing pandemic has enhanced the awareness of purchasing health insurance policies among people and motivated people to increase their sum insured value while renewing their health policies. As a result, many statistics have claimed that more than 30 crore people purchased various health insurance plans last year between April 2020 and September 2020.

To protect themselves against this deadly COVID-19 virus, customers have been inclined to purchase various health insurance policies. The COVID-19 is certainly one of the most infectious viruses in recent history. Moreover, apart from medical inflation, the cost of hospitalization due to COVID-19 was very high, especially at peak times. Most people consider these factors while purchasing health insurance plans for themselves and their family members. But many of them purchased health policies without checking the minute details of their plans because of the panic situation that was created last year. At that time, the only priority was to purchase health insurance coverage as soon as possible.

Now, within one year, most policies are on the verge of renewal. And this year, we all faced a stronger and deadlier second wave of the COVID-19 that has hit the country in March 2021. So, it would be an ideal time to review your health policy to evaluate whether you are getting the coverage against your policy or not.

While renewing your health insurance plans, you must consider the below-mentioned parameters.

What is the sum insured in health insurance?

The sum insured is the maximum amount that your insurer will pay for your hospitalization and medical bills. Any amount above the sum insured will be paid out from your pocket. While renewing your policy, you must review the sum insured you are getting under your health policy.

A health crisis can happen to anyone at any time. Suppose all your family members need to be hospitalized simultaneously under any health crisis like the COVID-19. In that case, a sum insured of Rs 7-10 lakh may not be sufficient to combat the situation. Moreover, the cost of medical inflation is also rising exponentially every year. Realizing all these facts, now people are opting for a higher sum insured to enhance their coverage. 

Several statistics have also claimed that there has been an increase in the overall sum insured by almost 100 percent, from around Rs 11.4 lakh in FY20 to over Rs 22 lakh in FY21. Instead of choosing a sum insured of Rs.3-5 lakh, policyholders prefer a higher sum insured of Rs 25 lakh, even up to Rs 1 crore.

Sum assured in health insurance

Sum assured is the pre-decided amount that a health insurance company usually pays to the insured policyholder when the insured event takes place.

Sum insured Vs sum assured

• Sum insured only reimburses the amount of loss or damage (based on the indemnity principle). In sum assured, a fixed amount is paid to the beneficiary in case of the death of the policyholder during the tenure period.
• Sum insured offers only reimbursement, no monetary benefit. But for sum assured, the beneficiary or the insured gets the monetary benefits.
• Sum insured is applicable for non-life insurance products like health insurance. Sum assured is applicable for life insurance and premium return policies.

Sub-limits in your health insurance plans

You should check the clause of sub-limit while renewing your health insurance plans. A sub-limit clause in a health insurance policy restricts certain benefits up to a limit. For example, there is a sub-limit of room rent (only one percent of the sum insured) in case of hospitalization. So, if you purchased a policy of Rs. 10 lakh, you would only claim a maximum of Rs 10,000 towards the rent of a room during your stay in the hospital. This is another reason that you should consider a higher sum insured policy. Because a higher sum insured policy doesn’t come with any sub-limit, so, you can choose an expensive private room or even a suit for your treatment with a higher sum insured policy.

Co-payment

You also need to review the co-payment clause while renewing your policy. Usually, insurance companies use this clause to lessen the premium amount for policyholders. But at the time of a claim, you need to pay a humongous amount from your pocket. But if you choose a higher sum insured policy, you may not get any such clause. These days, many insurance companies offer such policies at very affordable premiums. Now, you don’t need to compromise with the benefits to save a tiny amount.

So, you should choose a higher sum insured health plan that will protect you against the COVID-19 and will safeguard your health and expenses for upcoming years. Suppose you port your existing policy to a higher sum insured policy. In that case, you can still enjoy all the benefits even if there will be no waiting period for the pre-existing diseases. Always consider medical inflation, your healthcare needs, and medical emergencies before choosing a health insurance plan. Only a higher sum insured policy will help you to combat all these comfortably.