Sum Assured vs Sum Insured
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Sum Assured vs Sum Insured
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Key Distinguish Between "Sum Assured" and "Sum Insured"

Life insurance now becomes a crucial part of life to protect your loved ones from financial-related issues that occur in your life. However, sometimes insurance terminologies can be pretty complicated for policyholders to understand. Regarding the insurance domain, the two most fundamental terms that many people complicate and use interchangeably are sum assured and sum insured.

Further, "insured" or "assured" terms are typically used mutually. However the word "insured" often refers to the owner of the asset insured or the reimbursement of insured loss. While the term "assured" refers to the person who'll get the coverage amount. A good understanding of both concepts allows you to select the right monetary coverage for your life insurance.

Keep reading the subheadings below to better understand the difference between Sum Assured and Sum Insured.

Significance of Sum Assured and Sum Insured in Insurance

Sum assured, and the sum insured are the two most fundamental terminologies in the insurance domain. Though both words sound similar, when it comes to principle, they have different concepts altogether. To learn the difference between both terms, check out the details mentioned below in the table:

Sum Assured

Sum Insured

The term assured refers to the pre-decided amount a nominee will obtain on the demise of the policyholder.The term insured refers to the maximum reimbursement received at the time of insured loss.
When it comes to determining the sum assured, it depends upon various factors such as income, budget, inflation, lifestyle, and overall working life period.The sum insured value may rely on the insured asset. For instance, when it comes to medical insurance, it may depend upon past medical issues or pre-existing diseases.
The sum assured is generally calculated by the HLV (human life value)The sum insured is generally estimated based on the insured asset value.
It relates to life insurance policies such as health, term life, and whole life insurance.It relates to non-life insurance policies such as motor, travel, property, credit, accident insurance, etc.

What is the Definition of Sum Assured?

Sum assured is a guaranteed fixed amount that the policyholder decides while purchasing the life insurance policy. However, the insurance company pays the coverage amount to the policyholder's nominee in case of uncertain demise.

For instance, if the insured person pre-decided that the sum assured or coverage for his insurance plan would be Rs. 40 lakh, the minimum fixed amount the beneficiary would get on the policyholder's death is around Rs. 40 lakhs.

It is one of the primary factors affecting the premium or the cost of your life insurance. Whether you're deciding to purchase life insurance or coverage amount, you should first consider the factor of your present or future financial positions.

How to Estimate the Sum Assured?

When it comes to estimating the right sum assured, most people struggle while deciding the ideal coverage based on their family needs. But with the help of the Human Life Value (HLV) calculation, prospective policyholders can find their sufficient sum assured hassle-free without any hindrance.

  • To do so, you've to visit the HLV calculator site on your browser and fill out some necessary details such as income, age, family members, and present or future expenses.
  • After that, the calculator accounts for future inflation and estimates the ideal sum assured required to cover your family's future expenditures.
  • Even you can reach out to your insurer and share your concern about the sum assured for better understanding.

What is the Definition of Sum Insured?

The sum insured is compensation the insurance company provides you for the loss or damaged asset. It is typically applicable in non-life or general insurance such as motor, travel, property, credit, accident, home insurance, etc.

The insurance policies that offer a sum insured provide reimbursement or coverage in case of any damage, loss, or injury to the insured asset. However, the sum insured is an ideal way to make sure that there are no monetary benefits made by the policyholder's pocket at the time of need and that only their losses are covered.

Remember that the policyholder only obtains the reimbursement for the insured asset. For instance, if you hold a health insurance policy with a sum insured amount of Rs. 1 lakhs, then the insurer entirely pays the hospitalization and medicine bill. But if the bill exceeds the sum insured amount, then the insured person has to pay the remaining amount.

Pros of Deciding the Right Sum Insured

Selecting the right amount of sum insured is essential to get the most out of your insurance policy. However, you'll get several benefits out of this few of which are discussed below-

  • Maximum Financial Coverage If you decide the insufficient sum insured when purchasing life insurance, it may affect or increase your out-of-pocket outlays. The right sum assured gives you peace of mind and you can be financially stress-free about health issues. Further, the insurance company will pay the coverage or reimbursement for the insured asset as mentioned in the plan.
  • Keeps Savings Safe A life insurance plan with sufficient sum insured allows policyholders to keep their savings intact. Suppose the insured person is confronting an uncertain medical emergency. In that case, their savings will be secure in accounts, and the sum incurred will cover all the hospital expenses.
  • Flexibility to Make Claims The lower sum insured can get spent faster, and you may have to face financial liabilities for additional claims. The sufficient sum insured allows policyholders to claim until the very end of the policy duration without purchasing the additional coverage.


To get the most out of your life insurance plan, firstly, you should understand the key difference between the sum assured and the sum insured. These two are the most fundamental terms in a life insurance policy, allowing prospective policyholders to select the plan that best suits their needs. The factors discussed above in subheadings should guide you in selecting the best option regarding the sum assured and insured in insurance.

Between Sum Assured and Sum Insured: FAQ's

1. Can I change the sum insured amount?

Based on your life insurance policy contract, you can decide to make amends on your sum insured and the attached rider, where applicable.

2. Does sum assured be change?

In a long-term policy, contracts are up to 10 to 30 years or a lifetime. In this case, you're not allowed to change the pre-decided sum assured that you've already given.

3. Do I get a sum assured on maturity?

Yes, once your policy matures, then the insurance company will pay you a monthly bonus plus a sum assured value.

4. What is the maximum sum insured?

The maximum sum insured will depend on the damaged insured assets that the insurer will pay out in case of a claim.

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Daina Mathew

Written By: Daina Mathew

Daina is a content writеr with a profound grasp of Insurancе, Stocks, and Businеss domains. Hеr extensive 3-year еxpеriеncе in thе insurancе industry еquips hеr with a nuancеd undеrstanding of its intricaciеs. Hеr skills еxtеnd to crafting blogs, articlеs, social mеdia copiеs, vidеo scripts, and wеbsitе content. Her ability to simplify complex insurancе concepts into reader-friendly content makes her an еxpеrt in the domain.