How is the sum assured different from the sum insured?
Insurance plans involve different types of features, which offer several advantages to policyholders during difficult situations. However, it is imperative to know more about them in detail before investing money. While buying an insurance plan, customers should understand the terms used in the coverage process properly. This will help a lot to get coverage for illnesses, injuries, and death. Furthermore, most insurance plans come with the latest features which cater to the needs of policyholders.
Insurance terminologies may become complications unless policy buyers don’t know the meaning. Sum assured and sum insured are the two terms often used in an insurance policy that most policyholders are not aware of them properly. It is wise to evaluate the difference between them with more attention. This is because both terms define the coverage level of an insurance policy. Not only that, they even provide ways to accomplish goals during the claim process to experience peace of mind. Both terms are different, and a policyholder should check them correctly.
What is the Sum Insured?
Policyholders should know the sum insured in insurance plans from various sources that will help meet the exact needs in the coverage process. It refers to the amount paid by an insurer for the losses, damages, injuries, and medical expenses. The concept applies to non-life insurance policies, which reimburse amounts only for the losses and not for anything. A policyholder won’t get any monetary benefit from the basic sum insured.
For example, assume that a person has a basic sum insured amount of Rs.2 lakhs in a policy. He/she is eligible for coverage up to 2 lakhs for hospitalization and accidents. When the amount exceeds 2 lakhs, then he/she has to pay the additional amount from his/her pocket.
What is a Sum Assured?
The sum assured is a term used in life insurance policies and return insurance policies where an insurer will pay a pre-defined sum to a policyholder. It remains unchanged throughout the policy period, and a nominee will get the amount after the death of a policyholder. The policy stands terminated when the insurer pays the sum assured amount to a nominee. Insurers will determine the sum assured amount paid on the paid premiums.
Policyholders should know what the sum is assured before buying an insurance plan from the markets. An insurance company will guide customers to select a policy with the right sum assured amount. This, in turn, gives ways to secure the financial future of a family during the sudden demise of a policyholder. In addition, most life insurance plans offer the maturity benefit to policyholders, thereby showing ways to lead a trouble-free life.
How to calculate the sum insured amount?
Policyholders who want to calculate the basic sum insured amount should keep certain things in mind that will help meet exact needs. Anyone who wants to insure an asset should consider the value of the asset so that they can get full compensation. On the other hand, they can opt for a sum in a health insurance plan which is sufficient to cover medical expenses during emergencies. Those willing to buy a family floater plan should ensure that the sum insured amount provides coverage for all members, including children. While insuring for life, policy buyers should consider essential things. They include current income, expenses, outstanding financial liabilities, etc. It is wise to assess the impact of inflation in the long run when choosing the sum assured amount.
How to calculate the sum assured amount?
Policy buyers should decide the sum assured amount for life insurance policies based on certain essential factors. Some of them include age, income, number of dependents, outstanding liabilities, etc. A person should make sure that an insurance plan is adequate for his/her family to manage expenses during the absence. Furthermore, the prices of plans may increase every year, and policy buyers should consider them while buying a plan from an insurer. When purchasing an insurance plan, customers should read the terms and conditions that will help avoid any unwanted problems.
Evaluating the differences between the sum insured and sum assured
It is necessary to carefully know the differences between sum assured vs. sum insured while purchasing an insurance plan. This is because they are not interchangeable, and policy buyers should make the right decision when selecting a plan. Sum assured gives more importance to human life when a family loses an earning member. A life insurance plan pays the coverage amount to a nominee if a policyholder passes away. At the same time, general insurance offers coverage only for certain events such as injuries, critical illnesses, accidents, disabilities, etc.
Determining the sum insured and sum assured
Policy buyers who want to determine the sum insured and sum assured should work with advisors and agents that will help gain more advantages. Not only that, they can use the online calculator for this purpose by entering certain essential details. Buying a policy with a high sum insured and sum assured amount lets a policyholder get maximum protection from financial threats. Besides that, it provides ways to accomplish goals in the coverage process that will help bring peace of mind.
How to choose the best insurance policies?
Insurance companies offer life insurance, health insurance, term insurance, and personal accident insurance for market policy buyers. However, it is wise to read reviews of top insurance firms online to select the best one accordingly. Customers should also compare the quotes and estimates offered by insurers online, which gives ways to gain more ideas. The terms and conditions may vary from one insurer to another insurer in the markets, and policy buyers should know them in detail. This, in turn, gives ways to avoid disputes and other problems while claiming amounts from an insurance company.