The sum insured in medical insurance refers to the maximum amount that the insurance provider is liable to pay in the event of the policyholder’s hospitalisation. If the hospitalisation expenses exceed the sum insured on the policy, it won’t be borne by the insurer. Instead, it has to be paid by the policyholder. For example, if the sum insured of a health insurance policy is ₹ 10 lakhs and the hospitalisation expenses turn out to be ₹ 12 lakhs, then ₹ 10 lakhs will be paid by insurer and the policyholder will have to pay ₹ 2 lakhs out of his pocket.