How much health insurance cover do I need in India? Sum insured worked out

Choose a sum insured that would pay for one serious hospitalisation in the hospital you would actually use, plus a margin for medical inflation over the next five years, plus room for a second admission in the same year if your cover is a floater. Work from your own estimate, not from a rule of thumb. For many families in a metro this method lands in the range of ₹10–25 lakh of total cover, often built as a base policy plus a super top-up; in smaller cities it can be less. The steps below show how to reach your own figure.

This guide is part of the health insurance buying checklist.

Step 1: estimate the cost of one serious admission

Ask two or three hospitals you would use for estimates for a planned procedure (many hospitals publish package price ranges or will give an estimate at the billing desk) and look at your own or relatives' past bills. Useful reference cases:

Scenario	What drives the bill
Cardiac event with angioplasty	Cath lab, stents (implants), ICU days
Major abdominal surgery	Surgeon and OT fees, room tier, length of stay
Cancer treatment course	Surgery plus chemotherapy or radiotherapy cycles over months; day-care claims
Long ICU stay after infection or accident	ICU per-day charges, ventilator, medicines
Joint replacement	Implant cost, sub-limits in many policies

Write down the highest realistic estimate among these for the hospital type you would choose. This is your base event cost (B). We will use illustrative numbers below.

Step 2: add medical inflation

Hospital costs in India have historically risen faster than general inflation. Choose a planning rate, for example 10% a year (an assumption, not an official figure), and project five years ahead:

Future cost = B × (1 + r)^5. At 10%, (1.10)^5 = 1.61.

Step 3: allow for the floater effect

For a floater, add a share for a second admission in the same year. A simple allowance is 30–50% of B for a family of four (assumption). For individual policies, skip this step.

Step 4: subtract cover you already have, carefully

Employer cover: count it only if you are confident it will continue; it ends when you leave.
PM-JAY / Vay Vandana: counts only for treatment at empanelled hospitals.
Existing personal policy: counts fully, with its own clauses.

Worked example 1: metro family of four

Illustrative. Bengaluru, couple in their late 30s, two children. Estimates from a large private hospital: cardiac case ₹6,00,000; major surgery ₹4,50,000. B = ₹6,00,000.

Five-year inflation at 10%: ₹6,00,000 × 1.61 = ₹9,66,000.
Floater second-admission allowance at 40% of today's B: ₹2,40,000 × 1.61 = ₹3,86,400.
Total target: ₹9,66,000 + ₹3,86,400 ≈ ₹13,52,000.
Employer cover ₹5 lakh exists but is not counted for continuity.

Choice: a ₹10 lakh floater plus a ₹20 lakh super top-up with a ₹10 lakh deductible gives ₹30 lakh of total cover for catastrophic cases. Alternatively a ₹15 lakh floater alone meets the target. The super top-up route usually costs less for the extra headroom; see super top-up vs higher sum insured.

Worked example 2: couple in a tier-2 city

Illustrative. Indore, couple aged 45 and 42, children grown up and covered elsewhere. B = ₹3,50,000 for a major procedure at a local multispecialty hospital; they would travel to Mumbai only for rare cases.

Inflation: ₹3,50,000 × 1.61 = ₹5,63,500.
Individual policies or a two-person floater: add 30% allowance (₹1,05,000 × 1.61 = ₹1,69,050) for the floater.
Target ≈ ₹7,30,000.

Choice: a ₹7.5–10 lakh floater. Because they might go to a metro for complex care, they check the zone they buy: a policy priced for their zone could add a co-pay for treatment in a higher-priced city. They compare the higher-zone premium against that co-pay.

Worked example 3: single parent aged 66

Illustrative. Pune, widowed mother aged 66 with controlled hypertension. B = ₹5,00,000 (cardiac case). She has the Ayushman Vay Vandana card (₹5 lakh at empanelled hospitals).

Inflation: ₹5,00,000 × 1.61 = ₹8,05,000.
Individual policy: no floater allowance.
PM-JAY counts only if she is willing to use empanelled hospitals.

Choice: a ₹5 lakh individual policy with access to her preferred hospital, plus reliance on PM-JAY for a second layer at empanelled hospitals, or a ₹10 lakh policy if premiums are affordable. See insuring parents and senior citizens.

Common sizing mistakes

Using the employer's cover as the base. Size personal cover as if the employer's cover did not exist, then use the employer cover to meet a super top-up's deductible.
Sizing a floater like an individual policy. One sum insured is shared.
Ignoring room-rent caps. A ₹5 lakh policy with a 1% cap pays room rent of only ₹5,000 a day. See room-rent limits.
Never revisiting. Recheck the figure every few years or after moving city. Increasing cover at renewal may need underwriting, and the increase carries fresh waiting periods.

Checking the cost of your target

Once you have a target, collect quotes for two or three structures (single base policy; base + super top-up) and compare them with the quote comparison tool. Then follow the worked quote comparison.

Frequently asked questions

Is ₹5 lakh enough?

It can be for an individual in a smaller city using mid-priced hospitals. For a family floater in a metro, one serious admission can use most of it. Do the arithmetic above for your situation.

Does cumulative bonus count towards my target?

It adds cover, but it can be reduced after a claim. Treat it as a cushion, not as part of the target.

Should I include OPD costs?

No. Sum insured is for hospitalisation. Budget OPD separately or consider OPD cover only if the price is clearly below your expected spending.

Sources and where to check

IRDAI — rules on increasing sum insured, portability and waiting periods
Ayushman Bharat PM-JAY — empanelled hospital list
Ministry of Health and Family Welfare — public health facilities and schemes