When you are dealing with Life Insurance, it is inevitable that you stumble across the term ‘Sum Assured’. Unlike most other assurances that you may hear from your LIC Agent, this term is mostly self explanatory. It simply means that it is the minimum amount payable to insured person (or his nominee) when the situation of claim arises (provided you followed the policy guidelines) or the policy matures.
Take the new LIC Wealth plus policy for example. The policy term is of 8 years and there are 3 ways to enter into the policy, one is by paying an annual premium, two is by paying a monthly premium through ECS mode and three by taking a single premium policy.
The minimum premium payable annually is Rs.20000 and if it is through monthly ECS, it is Rs.2000. If you rather choose a single premium, you have to pay Rs.40000.
Sum Assured for Wealth plus policy
In this scenario, the Sum assured for various premium paying term is as follows:
For Single premium policy, the Minimum Sun assured is 5 times the premium (5 x 40000) if the insured person enters the policy at the age of 40 and below, 2.5 times if enters the policy between 41 and 50 years and 1.25 times when the insured enters after 51 years.
For 3 years annual premium payment term, the minimum sum assured is 10 times the annual premium being paid, if the insured enters into the policy at the age of 50 and below and 5 times the annual premium if enters the policy at 51 years and there after.
Note: There’s a different between Sum Assured and Maturity benefit. In cases where a life assured survives through the entire policy term, LIC just pays him maturity benefit (this includes any bonus or loyalty additions or number of units, in case its a ULIP). The Sum Assured is not payable on this occasion.
Where as, in the unfortunate event of death of LA, the company will pay him Sum Assured, plus bonus (if applicable) plus what ever amount his account has (for example, funds if its a ULIP or balance if its a Bima account policy).