In a world where medical bills can rack up in the blink of an eye and a sudden hospitalization can leave you destitute, having health insurance isn’t a luxury, it is a necessity. In this scenario, perhaps the right question to ask would be, “But how much health insurance do I need?”
Too little, and you may be exposed to vulnerable situations where you have to pay out of pocket. On the other hand, having a redundantly hefty cover will require you to pay high premiums as long as you continue the policy. Both can have a dire impact on your financial savings and bandwidth.
In this article, we shall attempt to answer that question. We will also delve into the factors that affect your sum insured and provide you with a list of the best health insurance plans in the market right now. Let’s get into it:
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What is Sum Insured in Health Insurance Plans?
The sum insured is the base amount of financial coverage you opt for while picking your health insurance policy. It represents the maximum amount your insurer will pay in case of a claim unless there are sub-limits in your policy.
Let’s use an example for better understanding.
Ramesh, a 29-year-old Product Manager, wants to purchase a health insurance policy for himself and his spouse, who is 27 years old. What would be his ideal base cover?
While it may be tempting to throw out absolute numbers, the reality is quite different.
Several factors affect the amount of base cover you require. In Ramesh’s case, we must consider that the cover he opts for should be sufficient for two young people. Now, say both he and his spouse are relatively healthy individuals. In that case, their premiums will be lower, and the low-risk factor will urge the insurers to offer them a higher cover amount.
Similarly, depending on your needs and premium budget, you can choose a base cover/sum insured that’s appropriate for you. However, since the ideal sum insured varies so vastly from one person to another, it’s always best to confer with an expert before calculating the sum insured for you. If you’d like to do so, you can get a free 30-minute consultation with one of our advisors- no pressure to buy, just genuine advice on what works best for you.
How Much Health Insurance Cover Do You Need?
Now that we know that the ideal sum insured is completely relative, we must delve into the factors that affect the amount of coverage you need from your health insurance:
- Age: Age is one of the most critical factors in deciding the sum insured. Not only does your premium increase with age as you move from one age slab to the other, other complications also need addressing. For instance, a person under 18 will find it challenging to attain a policy for himself and see that they’re better off being in a family floater with their parents or guardians. Apart from that, the older a person is, the more difficult it gets to get a health insurance policy with a higher coverage. The reason is that the older one is, the more risk is associated with issuing them a policy because they may have some pre-existing disease. So, the risk factor for insurers goes up substantially. Although health insurance policies are a unique financial tool that allows you to boost your coverage during renewal across the policy life, insurers will rarely allow you to do so if you’re past a certain age.
- Type of health insurance policy availed: Health insurance policies can generally be of three kinds:
- Individual: As the name suggests, individual policies cover a single policyholder, and therefore, the sum insured required would depend on a single person’s risk factor, age, lifestyle, and pre-existing conditions. Moreover, there is more room for customization when it comes to finalizing a policy, as you get to pick and choose the features that are important to you.
- Family: A family floater is a health insurance contract that safeguards an entire family (generally you, your spouse, your kids, your parents, and/or your in-laws) from dipping into their savings in the unfortunate event of hospitalization. However, if you opt for a family floater, you must know that the sum insured of your policy will be shared by multiple members. Apart from shared coverage, it’s also important to note that the diversity in age, health status, and medical requirements makes it difficult to truly hone in on the unique features required by each individual.
- Corporate: Corporate health insurance is a policy your employer provides, offering immediate coverage with no waiting period. While it is an essential first line of defense when things go awry, it often lacks adequate coverage. Moreover, there is no room to choose the features that you’d like, as you have to accept the terms and features extended by your employer without having the opportunity to pick any add-ons. Additionally, the coverage ends if you switch jobs or retire, leaving you uninsured. For these reasons, it’s always suggested that you supplement your corporate insurance with a comprehensive retail plan.
- Number of members covered under the policy: The more members covered under a policy, the higher the sum insured should be, especially in a family floater, where a single cover is shared among multiple people belonging to different age slabs and having varied medical needs. Since the premium is calculated based on the eldest member’s age, it tends to be higher, making it difficult to afford a higher sum insured.
- Pre-Existing Medical Conditions: Pre-existing diseases (PEDs), lifestyle-related ailments, and an unusual BMI (Body Mass Index) can all lead to frequent hospital visits, specialized treatments, and long-term medication, all of which drive up medical expenses. Since PEDs increase the likelihood of claims, insurers assess a person’s medical history through a process known as ‘underwriting’ and may accordingly impose restrictions such as waiting periods or sub-limits. In addition to that, they may apply loading charges to your premium.
To ensure financial protection against these recurring and often high-cost treatments, opting for a high sum insured is essential. Without a sufficient sum insured, you risk exhausting your cover too soon.
Moreover, some diseases (such as diabetes, cancer, etc.) are hereditary. If a person is predisposed towards developing a specific condition, the risk factor of having to undergo hospitalization or treatment for the same shoots up drastically. With that in mind, it’s suggested that they get a higher cover to tackle possible expenses in the future. - Location: It is also essential to consider your location. Tier-1 cities are generally more expensive, and hospitalizations would entail a hefty hospital bill. Tier-2 and Tier-3 cities are more affordable in comparison.
Why is it Important To Calculate the Ideal Health Insurance Coverage?
In order to answer this burning question, let’s take the help of two examples:
- Dual issues with higher or lower cover
- CASE 1: If your health insurance coverage is less than what you require
Arvind, a 28-year-old software engineer, has a policy of 5 lakhs. Upon hospitalization regarding a heart condition, the hospital bill amounted to 15 lakhs. The insurer paid 5 lakhs, leaving Arvind to procure the remaining 10 lakhs himself. Had he taken a higher cover, he would have been spared the financial burden. - CASE 2: If your health insurance coverage is substantially more than what you require
Rekha, a 35-year-old marketing executive, has taken a health insurance policy with a sum insured of 1 crore. However, an individual rarely needs such a high amount of coverage unless they have preplanned medical expenses in the form of some specialized procedure. A well-structured policy with restoration benefits and no-claim bonuses could have provided sufficient coverage without excessive premiums.
Some insurance companies nowadays also offer the feature of having an unlimited sum insured or opting for an unlimited sum insured once in a policy lifetime but it’s definitely not necessary to go for it unless you want to have peace of mind for any pressing medical conditions.
- Calculation of premiums among competitors
Say, you want to buy a fancy dress for your friend’s wedding. How many shops do you hop? How many sites do you visit before you land upon the perfect one?
A dress that is appealing to both you and your wallet!
In that case, why shouldn’t it be the same for your health insurance plans? After all, you are looking at a significant financial decision that will weigh heavily on your savings and the quality of medical services you render during emergencies. So, before you finalize a health insurance plan, you must compare the features of policies from different insurers and their respective premiums. However, comparing premiums means you will have to decide the sum insured - this will help you gain access to a premium insurance product without redundantly compromising your savings (read: overpriced products from insurers).
What are the Best Health Insurance Plans in India in 2025?
- HDFC Ergo Optima Secure: HDFC ERGO Optima Secure is a comprehensive health insurance policy with preventive health checkups. The insurer ensures that every policyholder has access to annual preventive health checkups, aiding early detection and management of potential health issues.
Optima Secure offers unique features, such as doubling your base coverage amount right from day one through its Secure Benefit. Combined with good pre- and post-hospitalisation coverage of 60 & 180 days and no room rent restrictions. - Aditya Birla Activ One: Aditya Birla Activ One is a health insurance policy that goes beyond traditional coverage by integrating wellness-focused benefits such as regular health checkups & gym memberships. These checkups are part of the insurer’s comprehensive wellness program, which includes the HealthReturns feature, where you can get up to a 100% discount on premiums for the following year, provided you are healthy. Policyholders earn rewards for maintaining an active lifestyle — tracked through wearable devices or fitness logs — which can be used to offset future premiums or other expenses.
The policy also offers unlimited restoration of the base sum insured, no disease-wise sub-limits, and room rent flexibility, ensuring that you are not only incentivized to stay healthy but also well-protected during medical emergencies. - Care Supreme: Care Supreme combines affordability with extensive wellness benefits, making it an excellent choice for both individuals and families. The policy includes annual health checkups as an add-on promoting regular monitoring and preventive care. Additionally, Care Supreme offers unique wellness incentives, such as discounted gym memberships, which encourage a healthy lifestyle.
Care Supreme also has an unlimited restoration of the sum insured, no co-payment, and no disease-wise sub-limits. While the insurer’s complaint volume is slightly higher than some competitors, its affordability and wellness perks make it a compelling option for those seeking to combine good coverage with preventive care. - ICICI Lombard Elevate: ICICI Lombard Elevate is an excellent health insurance policy on paper – it has unlimited coverage once in the policy’s lifetime, has a wide range of add-ons, global coverage, and even has a surrogate cover. These can be particularly useful if your family is dealing with expensive medical treatments. However, it has limitations, such as sub-limits on specific treatments, a nominal renewal bonus, and room rent restrictions on the base plan. All in all, this is a decent health insurance plan if you’re looking for cashless coverage for your family.
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Conclusion
Health insurance is a vital tool to protect your financial future, but it can come with complexities that might be difficult to navigate. One of the key elements is the sum insured, and it’s essential to find the right balance when choosing your coverage. Opting for too little could leave you vulnerable, while too much might result in high premiums throughout the policy term. It’s important to assess your needs to make an informed decision carefully. If you need guidance, seeking expert advice can help you make the right choices.
