Sum Assured is the amount specified under a life insurance policy for the applicable insured event, subject to policy terms and conditions.
Sum Assured is the amount specified under a life insurance policy for the applicable insured event (such as death or maturity), subject to the policy terms and conditions. It represents the primary coverage benchmark of a life or term insurance contract.
Rahul purchases a term insurance policy with a Sum Assured of ₹1 Crore. If Rahul passes away during the 30-year policy term, his nominee (wife) receives the ₹1 Crore tax-free lump sum payout from the insurer, subject to policy terms and claims verification.
Sum Assured is used in Life Insurance for the specified payout amount upon an insured event, subject to policy terms. Sum Insured is used in Health & General Insurance as the maximum annual reimbursement limit for actual medical expenses.
Many policyholders misunderstand this clause until a claim actually occurs. Always verify the exact definitions in your policy wording schedule rather than relying on verbal marketing summaries. Disclose all material facts truthfully at the time of proposal to help ensure smooth claim assessment without non-disclosure issues.
Under IRDAI norms, life insurers must settle death claims within 30 days of receiving all complete documentation. Death benefits paid under a Sum Assured policy are eligible for tax exemption under Section 10(10D) of the Income Tax Act, 1961, subject to statutory limits.
Financial planning principles generally suggest evaluating a Sum Assured of 10x to 15x your gross annual income plus outstanding liabilities (home loans, personal debts).
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