Quick context: This article is about the sum insured — how large your policy should be. That is a different question from how much of the premium is deductible under Section 80D, which our Section 80D guide and 80D calculator cover. Confusing the two is the single most common reason people end up underinsured.
Ask most people how they arrived at their health cover and the honest answer is some version of: whatever premium felt comfortable, nudged by a tax deduction they had heard about.
Section 80D caps how much of the premium you can deduct. It has nothing whatever to do with how large the policy should be. One is a tax rule; the other is a question about hospital bills.
# The tax reason to buy is now worth nothing to most people
This is the part a CA notices and an insurance article usually does not.
Section 80D is not available under the new regime — and the new regime has been the default since FY 2023-24. So unless you actively opted into the old regime, your health insurance premium is giving you a deduction of exactly zero.
That is not an argument against health insurance. It is an argument against sizing it around tax. If the tax benefit is nil, the only question left is the one that always mattered: what does the treatment actually cost, and can this policy absorb it?
If you are not sure which regime you are in, the old vs new regime decision guide settles it, and the 80D calculator shows what the deduction would be worth if you switched.
# Why "50% of income" is a floor, not an answer
The usual starting point is to insure for roughly half your annual income. As a first filter it is fine. As a final number it fails, because it is derived from what you earn rather than what treatment costs where you live.
Someone on ₹12 lakh a year lands on ₹6 lakh by this rule. Whether that is adequate depends entirely on the hospital they would actually be admitted to, and a rule based on income cannot know that.
The more reliable direction is the other way round: start from the cost of the treatment you would realistically need, in the hospitals you would realistically use, then check whether your cover clears it.
# Indicative ranges — as a starting point to check, not an answer to adopt
Where these come from. The ranges below are indicative benchmarks in general circulation, not figures we independently verified for this article. They are useful as a place to start the check described in the next section — not as a recommendation to buy a particular amount. Our own insurance priority guide works through coverage amounts across all five policy types and is the more detailed treatment.
| Situation | Indicative range |
|---|---|
| Individual, tier 2/3 city, under 40 | ₹5–10 lakh |
| Individual, metro, under 40 | ₹10–15 lakh |
| Individual, age 40+ | Towards ₹15–25 lakh |
| Family floater, tier 2/3, 3–4 people | ₹10–15 lakh |
| Family floater, metro, 3–4 people | ₹15–30 lakh |
| Family floater including senior parents | ₹25–50 lakh, or a separate senior policy |
Two structural points matter more than any cell in that table.
A floater is one pool, not several policies. Four people share one limit. One significant claim by one member can leave everyone else thinly covered for the rest of the policy year — which is precisely when a second illness in the same household is least welcome.
Medical costs move faster than general prices. Our insurance guide cites medical inflation at 10–14% a year. At that pace a treatment costing ₹3 lakh today is on a path to roughly double inside seven or eight years. A sum insured that was right five years ago may already be short, with nothing about your own life having changed.
# The check that actually settles it
Four steps, and they take an evening:
- Look up real costs, not averages. Call or check the tariff at the two or three hospitals you would actually be taken to. A national average is not the bill you will receive.
- Stress-test the floater. Ask your insurer, in writing, what remains available to the other members after one member claims a stated amount. The answer is often less obvious than the brochure suggests.
- Price parents separately. If anyone on your floater is over 60, get a standalone senior-citizen quote and compare the two structures on total premium and on what each leaves intact after a claim.
- Compare base-plus-top-up against one large policy. Both reach the same total cover; the two-part structure is often cheaper because the top-up only engages above a deductible. Decide on quotes, not on habit.
The same reasoning applies to life cover, where the sizing method matters more than any rule of thumb — term insurance adequacy works through the 15x and HLV approaches.
# Why this sits in a finance plan, not a policy folder
An uninsured hospitalisation is one of the few events that can take a decade off a retirement corpus in a single month. That is the real relationship between insurance and the rest of your money — and it is why the retirement corpus calculator is worth running after you have settled this number, not before.
See whether you are under-insured or over-paying — your life, health and term cover analysed against your actual dependants and income. Try the Insurance Health Check →
# Related reading
- 5 insurance policies every Indian family needs — priority order and coverage amounts
- Section 80D — health insurance deduction, senior citizen limits
- Term insurance adequacy — 15x vs the HLV method
Disclaimer: This article is educational and general in nature. VittSphere ONE is not an IRDAI-registered insurance broker or agent, does not sell insurance, and does not recommend any specific policy or insurer. The sum insured ranges above are indicative benchmarks in general circulation, are not independently verified here, and will vary by insurer, city, hospital and individual health history. Confirm actual treatment costs and suitable cover with a licensed insurance advisor before acting. Data verified 7 September 2026.
