Most health insurance policies are based on the principle of indemnity. In simple terms, these help to compensate the policyholder for an expense or a loss, as per the policy coverage. The maximum expense or loss that can be covered in a year is commonly known as the sum insured of the policy. 

Thus, in health insurance plans, the sum insured is the maximum amount that will be paid by your insurer towards hospitalisation in a year. Any amount beyond the sum insured has to be paid by the individual. Also, you can claim all covered healthcare expenses up to the sum insured limit. 

For instance, let’s say that you have a health insurance plan that has a sum insured of Rs. 3 lakhs and you incurred hospitalisation expenses twice in the year. The hospital expenses in the first case were Rs. 1.80 lakhs and in the second case, it was Rs. 1.5 lakhs. Thus, your total hospitalisation expenses for the year were Rs. 3.30 lakhs. Since the sum insured of the policy is Rs. 3 lakhs, you will be able to claim healthcare expenses up to this amount in a year. In this example, you will be required to pay the additional Rs. 30,000 by yourself.

In case you do not file any claims or the hospitalisation expenses were lower than the total sum insured, then the insurer will not be liable to refund the money at the end of the policy tenure. Any unclaimed healthcare expenses will lapse at the end of the year and the insured limit will remain unutilised.