What is the meaning of sum assured in insurance?

What is sum assured with example?

Sum assured is a pre-decided amount that the insurance company pays to the policyholder when the insured event takes place. For example, when you buy a life insurance policy, the insurer guarantees to pay a sum assured to the nominee in case of the insured person’s demise.

What is the difference between sum assured and maturity amount?

The sum assured is the amount of money an insurance policy guarantees to pay up before any bonuses are added. In other words, sum assured is the guaranteed amount the policyholder will receive. … Maturity value is the amount the insurance company has to pay an individual when the policy matures.

What does sum assured in LIC means?

Sum assured refers to the pre-decided amount payable to the policyholder or beneficiary on the occurrence of insured event. … The insurance company guarantees to pay the sum assured in return for receiving regular premiums from the policyholder.

Is sum assured same as sum insured?

Two of the most important insurance terminologies are sum insured and sum assured. Though both the terms sound the same, in principle, the two have different meanings altogether. Sum assured relates to the benefit of your guaranteed1 return insurance plan, and sum insured defines the reimbursement of an insured loss.

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Who is assured in insurance?

Definition: Life assured or insured is the person(s) whose life is covered in the insurance contract. Description: In the event of a contingency, the insured can claim the amount or in the event of the death of the assured, the nominee will receive the insurance amount.

Is sum assured paid on maturity?

The sum assured refers to the amount guaranteed by an insurance policy whereas maturity value refers to the amount paid by an insurance company to the policy holder on maturity of the said policy.

How is sum assured in LIC calculated?

The basic format is Sum Assured + Bonuses + Final Additional Bonus (if declared). An example for calculation demonstration: Mr Z buys a policy of Sum Assured 15 Lakh with a term of 20 years. The insurance company includes Bonuses and Final Additional Bonus in the maturity value as per their company policy.

What is level sum assured and increasing sum assured?

Option 1: Level Sum Assured: The absolute sum assured amount to be paid on death remains the same throughout the policy term. Option 2: Increasing Sum Assured: The absolute sum assured amount to be paid on death remains the same until the 5th policy year is completed.

What is minimum sum assured in LIC?

The minimum sum assured or the death benefit on a life insurance policy shall not be less than 10 times the annual premium for individuals below 45 years of age. And for individuals above 45 years of age, minimum sum assured is 7 times the annual premium.

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Is sum assured less than total premium?

As per the above table, it is clear that premium for lesser term is more than that for higher term and total premium to be paid not to be confused with sum assured as it is minimum amount to paid to nominee in case of death of policy holder even single premium has been paid.