Prices Increasing Soon
Life insurance offers a financial safety net to ensure your loved ones are cared for in the event of your untimely demise. As the sole earner, your family relies on you for their standard of living and a secure future.
#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
When you purchase life insurance, the sum assured serves as the foundation that keeps your family financially stable, safeguarding their future in your absence. Read on to know more about the importance of understanding what the sum assured meaning and how it works.
Term Plans
Sum Assured Meaning - Sum assured is the fixed amount paid to the plan nominee/beneficiary in case of the unfortunate event of the policyholder's death. The insurance company pays this amount as per the desired sum chosen by you at the time of buying the life insurance plan. This benefit is the guaranteed sum of money that your family members will get in case of your absence in return, all your premiums should be paid.
The sum assured is crucial in a life insurance plan as it guarantees financial security for the beneficiary.
As we have understood the sum assured meaning, now let’s understand how this works in term insurance:
Let us understand this concept through an example:
Gagan worked in an IT firm and spent his entire life creating and developing codes. He was married to Neeta and had two children. After the birth of his two children, he was worried about them if anything happened to him. To get a safety net for them, he purchased a term insurance policy from Policybazaar for a maturity period until he was 65 years old. Unfortunately, at the age of 62, he had a heart attack, and the doctors could not save him.
Neeta was in a state of panic . She had to look after two children, all on her own now. However, since Gagan had nominated her for the 1 crore sum assured policy he had taken from Policybazaar, Neeta got that amount after filing a claim. This eased her panic and reduced her financial burden.
Secure Your Family Future Today
₹1 CRORE
Term Plan Starting @
Get an online discount of upto 10%#
Compare 40+ plans from 15 Insurers
Calculating the sum assured is quite feasible. Most people find it difficult to calculate the ideal cover amount for the future needs of your family. HLV (Human Life Value) Calculator helps you determine the sum assured for your term plan. This HLV calculator is available online. All you have to do is enter some details, such as an estimate of future and current expenses, age, income, and other information. The calculator factors in inflation over the coming years to estimate the ideal sum assured needed to cover your family’s expenses.
What is the Meaning of Sum Insured?
The sum insured is the money that the insurer pays to the policyholder in case of an unforeseen event like an illness. The benefit amount paid is a kind of reimbursements for the expenses incurred and not like sum assured, a fixed amount of money.
People often mistake sum assured and sum insured to be the same. However, we need to understand the differences between the two. The following table helps us understand the difference between the two:
| Parameter | Sum Insured | Sum Assured |
| Applicable for | Non-life insurance policies like motor insurance, health insurance etc. | Life insurance plans such as term insurance |
| Nature | It is based on the principle of indemnity, and reimburses the amount of loss or damage.reimburses the loss or damage amount | The amount is fixed and predetermined at the time the policy is purchased. It is given to the policyholder's nominee in case of death. |
| Benefits | No monetary benefit. Only the reimbursement or damage or loss amount is given. | Financial benefit is paid to the nominee of the policy. |
Read more about sum insured and sum assured meaning in hindi
Now we understand the concept of sum assured. It is also essential to consider the following factors while deciding the sum assured amount:
Age: Your age determines the coverage you need.
Income: Your income will help assess your living standards, and thus it is an important factor to determine the life cover (sum assured).
Dependents: The sum assured amount depends on the number of dependents. The higher the dependents, the higher the life cover you need.
Lifestyle habits: Your lifestyle habits are important in deciding the sum assured. If you are a regular smoker or consume alcohol regularly, it affects your decision of sum assured. These habits can result in a higher premium as you may require a higher sum assured since the life expectancy is reduced for smokers and drinkers
Read more about sum assured meaning in LIC
You can buy life insurance for the protection of your family. However these plans are also a good way to invest for long term goals such as a child’s education , retirement , marriage etc. You can increase the sum assured by either buying different plans or a single term plan with increasing cover.
Here are various types of life insurance plans that you might want to consider:
Term Life Insurance Term life insurance provides pure protection coverage. It offers substantial coverage at a minimal premium, ensuring financial security for your loved ones in your absence. It's recommended to have coverage 10-15 times your annual income. If you have other life insurance plans for specific goals, a lower sum assured may suffice.
Unit Linked Insurance Plan : ULIP combines life insurance benefits with an aggressive investment portfolio. It allows investment in diversified portfolios for market-linked returns.
Endowment Plans Endowment plans offer both insurance coverage and savings. The policyholder receives the sum assured upon policy maturity, subject to terms and conditions. In case of the policyholder's demise during the policy term, the insurance company pays the death benefits to the nominee.
Understanding the sum assured meaning and the difference between sum insured vs sum assured is crucial in life insurance planning. This can help choose a right insurance plan as per your needs. With this, you can easily calculate the adequate cover required to secure you and your family members. Also, when you choose the right cover, you pay the right premiums that fits your budget. There is no chance of hefty expenses or paying a high amount of premiums.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Annual Renewable Term Insurance (ATR) is tailored for short-term
Read more
The ICICI Pru iProtect Super Plan is a pure-term insurance plan
Read more
Many people wonder about its tax benefits when purchasing a term
Read more
Studying abroad can be a life-changing experience, offering
Read more
The divide between rural and urban lifestyles in Tamil Nadu is
Read moreInsurance
Calculators
Payment Methods
Secured With
Follow us on
