Sum Assured in Life Insurance

1. Dr. Amitabh Mishra

2.  Sum assured is also known as the cover or the
coverage and is the total amount you are insured
for.
 Sum assured is
◦ “the amount of money an insurance
policy guarantees to pay before any bonuses are
added”.
◦ “the guaranteed amount insured will receive”.
Dr. Amitabh Mishra

3.  On the event of death, the Sum Assured will go to
the nominee or insured beneficiary as per the
policy.
 Sum Assured is the reason why an insured pays
premium.
Dr. Amitabh Mishra

4.  Sum assured should be revised , when there is a
major change in insured financial situation. As:
◦ Change in marital status (get married or divorced)
◦ Birth and death in the family that adds to or reduces the
number of your financial dependents.
◦ When take a home loan
◦ A rise in salary
◦ When children are financially independent
Dr. Amitabh Mishra

5.  Bonus is
◦ “the amount given in addition to the sum
assured”
 Maturity value is
◦ The amount the insurance company has to pay
you when the policy matures.
◦ Maturity value would include the sum assured
and the bonuses.
Dr. Amitabh Mishra

6.  Riders are:
◦ “special provisions in an insurance policy that can expand
the benefits or the sum assured that is payable.
◦ “an add-on cover to the base policy that provides
additional benefits”.
◦ There are a range of optional riders that insured can buy at
an additional premium to suit his needs.
Dr. Amitabh Mishra

7. ◦ There are many riders which insurance companies
offer, including :
 Rider for accidental death: In addition to being eligible for
the death benefit, policy will also pay out an additional
amount if your death is due to an accident, as defined in the
rider.
 Rider for disability: In case insured don’t die but an
accident disables him, the rider will compensate up to your
pre-determined amount.
 Rider for Critical illness: pays a lump sum if the
policyholder contracts any of the specified critical
illnesses.
Dr. Amitabh Mishra

8.  Sum Assured depends on many factors
such as:
◦ Insured total net assets,
◦ Insured family’s current fixed annual income
◦ Insured family’s current fixed annual
expenditure
Dr. Amitabh Mishra

9. ◦ Insured age
◦ The age of insured dependents,
◦ Current health condition and health history
◦ Lifestyle and hobbies
◦ Driving Record
◦ Any loans or liabilities due
Dr. Amitabh Mishra