What is a Sum insured (vs sum assured)?
Sum insured is the maximum a health (or general) insurer will pay in a policy year — it works on indemnity, reimbursing actual costs up to that cap. Sum assured is a life-insurance term: a fixed amount paid on a covered event, regardless of any 'cost'. Health uses sum insured; life uses sum assured.
Indemnity vs fixed benefit
Health insurance is indemnity-based: it pays your actual admissible hospital costs up to the sum insured, and unused cover does not come to you as cash. Sub-limits, co-pay and deductibles can reduce what is paid within that cap.
Life insurance is a fixed-benefit contract: the sum assured is a defined amount paid to your nominee on death (or maturity, for some plans), not a reimbursement of expenses.
Example
A Rs 10 lakh health sum insured caps annual claims at Rs 10 lakh, paid against real bills. A Rs 1 crore term-life sum assured is paid in full to the nominee on the policyholder's death, with no bills involved.
Common mistakes
- Using 'sum assured' for health cover (or vice versa) — they are different mechanisms.
- Assuming a large sum insured removes sub-limits and co-pay; those apply within the cap.
Frequently asked questions
Does a higher sum insured mean my whole bill is paid?
Only up to the cap, and only the admissible portion. Room-rent caps, sub-limits and co-pay can still reduce the payout within the sum insured.
Is sum insured per person or per family?
It depends on the plan. Individual policies give each person their own sum insured; a family floater shares one sum insured across all insured members.