Insurance & Claims
Sum Insured
Sum insured is the maximum amount a health insurance policy will pay for covered claims during a policy year.
What is sum insured?
The sum insured is the maximum amount an insurer will pay towards covered medical expenses in a policy year. Once claims in that year reach this limit, further expenses are not covered under the base policy until it renews (unless the policy has a restoration or reload feature, or the person has additional cover).
In health insurance, sum insured is different from "sum assured" in life insurance. Health insurance is indemnity-based: it pays actual covered expenses up to the sum insured, not a fixed amount.
Individual vs floater sum insured
- Individual sum insured: each covered person has their own limit.
- Family floater: one limit is shared by all covered family members.
In group policies, employers may also set the sum insured by grade (for example, higher cover for senior levels) or keep it flat for all employees.
What can reduce what you receive
Even within the sum insured, the amount paid on a claim can be lower because of:
- Sub-limits on specific treatments or expenses
- Room rent capping and related proportionate deductions
- Co-pay clauses
- Non-medical items that the policy does not cover
So a high sum insured is only part of the picture – policy terms matter as much.
Why it matters for employers
Choosing the sum insured is one of the most important decisions in a group health insurance policy. Hospital costs, especially for cardiac care, cancer treatment and ICU stays, have risen considerably, and a sum insured that seemed adequate a few years ago may not be enough today.
Practical considerations:
- Typical treatment costs in the cities where employees live
- Family size covered and whether parents are included
- Whether to offer voluntary top-up or super top-up options
- Whether a corporate buffer is available for exceptional cases (a shared pool some policies offer, subject to rules)
Example
An employee's family floater cover is nearly exhausted after his son's hospitalisation. When his wife later needs surgery, the remaining sum insured covers only part of the bill. The company's policy includes a corporate buffer, and after HR approval under the buffer rules, the shortfall is covered. The next year, the company reviews its sum insured and introduces a voluntary super top-up.
Key takeaways
- Sum insured is the maximum the policy pays for covered claims in a policy year.
- It can be individual or shared as a family floater.
- Sub-limits, room rent caps and co-pays affect what is actually paid.
- Configure and compare cover options on our employee health benefits platform.