Insurance policies are an efficient way of planning an investment, as you get a sizable amount on the amount’s maturity and it can also shield you financially in case of any untoward incident. While discussing insurance policies, you may have come across the terms ‘sum assured’ and ‘sum insured’. Today, we are going to explain the significance of the term ‘sum assured’ and what it means. Every person buying an insurance policy should be aware of the jargon so that there is no confusion later.
The insurance policy is only purchased for the sum assured. This is the amount of insurance coverage determined by the insurance provider for the policyholder when the policy is purchased. This is the benefit that the insured and the provider have mutually agreed upon. This sum is determined at the time of insurance purchase.
In a life insurance policy, the insurer agrees to pay a set amount to the nominee in the event of death of the life assured during the policy term. In a life insurance policy with a maturity benefit, the sum assured, along with the bonus, is repaid to the policyholder at the end of the policy period.
The most critical component of purchasing a life insurance policy is determining the appropriate and correct sum assured. The sum assured establishes the insurance policy’s coverage level. It is sometimes referred to as coverage or coverage amount. When determining the sum assured, several parameters must be taken into account. The sum assured should be chosen depending on certain factors like the number of dependents, lifestyle, education, health expenditures and retirement fund.
Read all the Latest Business News here
Comments
0 comment