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What does Sum Assured mean in Insurance?

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).

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  1. kindly help,
    I am going to opt for new endowment plan table no 814. Table shows sum assured and maturity. I was told i will get sum assured plus maturity after the term finishes and i survive till the end of the policy. Is it true?

  2. I have taken the LIC policy in 2009 on my fathers name and paid premium for 1 year and didnt paid later. Now my father expired recently naturally. So can i get the paid amount or not.

    • Normally for first few premiums (especially for first premium) the cuts towards commission and maintenance will be high. Taking all that away, yes, you will get back the remaining amount (unless the terms specifically mention that this is not allowed in this particular policy).

  3. I have a icici prulife insurance and in this policy sum assured amount is 240000. I want to know about how many rupees pay by insurance company on maturity date.please help me.

  4. Madan Gopal Malladi

    I have taken a LIC policy in 2009 by paying a single premium of 26000, in the policy document it is mentioned as Basic sum assured and Maturity sum assured. My doubt is that what is the amount i will get, the policy is going to get matured in Jan 2014. Please let me know.

  5. Can you please explain the difference between ‘basic sum assured” and “maturity sum assured” in Jeevan Aastha LIC policy? When will these amounts be given to the proposer?

    • Basic Sum Assured is like normal SA as in any policy. Maturity Sum Assured is 1/6th the amount of Basic Sum Assured. Maturity SA (plus other benefits) will be given when the policy matures, that is when the Life Assured survives through the cover period. Where as Basic Sum Assured (with additional benefits as applicable) will be given if the Life Assured dies during the policy cover period.

      • Thanks for the explaination. I have one more doubt. In my policy (Jeevan Aastha), name of Life assured is blank. I don’t remember how I gave the details when buying this policy. What will be the implications then?

        • Can you check again? Sometimes the manual print doesn’t appear beside the intended column; it may be 2 or 3 lines above or below the LA column.
          If you’re sure, then it will be be a problem during maturity or claim time.
          First thing you should make sure is whether it is a printing error or there is no name of LA even in LIC’s records. You can either call your branch or register your policy at LIC customer portal.
          If you’re name is there in the records, then you can get a new policy bond.
          There must be a name for LA, I don’t know how it can work otherwise.

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