What is Sum Assured

Source:Max Life India Protection Quotient Express
To get a comprehensive life insurance coverage, it is crucial for everyone to understand the terminologies of insurance. Life insurance is planned for financial assistance that takes care of your family’s expenses in your absence. As a part of the policy, sum assured is a crucial term to learn about while buying life insurance . It determines the coverage level of your insurance policy.

• 1.Sum Assured Definition
• 2.What is the Difference Between Sum Insured and Sum Assured?
• 3.What Should You Consider While Selecting Sum Assured?
• 4.FAQs

Your age is a crucial determinant when it comes to choosing the right sum assured. The current age helps you determine the extent of coverage you require. For instance, if you are young and healthy, you can begin with a lower sum assured and gradually increase it over the policy period.

Whereas, if you are middle-aged and experience some health problems, you can select a higher sum assured or add riders like Critical Illness cover. It will act as a shield against increasing medical expenses without causing any burden on your finances.

This way, you can benefit from your life insurance plan in taking care of your health while your loved ones will get financial assistance after you.

As per the Handbook on Indian Insurance Statistics of IRDAI , the count of total life insurance policies in India was 328 million in 2017. If you assume each policy to correspond to a unique Indian citizen, this data accounts for around 25% of Indian population with life cover, implying the truth about lack of life insurance coverage amongst the masses.

One crucial factor behind it is lower average income, which keeps many people in India under the threat of financial setbacks.

This is what makes your budget an essential factor to consider while selecting the sum assured. Make sure you analyze your needs along with your monthly income to reach a definitive point of selecting sum assured. You should be able to set aside funds for regular premium payments.

Make a balanced decision to avoid skipping premium payments and choose a sum assured that can safeguard your family’s future. You can also plan to increase the sum assured of your life insurance policy as your income increases over time and choose return of premium option to get survival benefits.

The selection of sum assured should also be based on your lifestyle needs. For instance, if you are dealing with a job having high-stress levels, you need greater protection in the form of a higher sum assured. If you consume alcohol or tobacco, it is advisable not to hide such details with the insurer. It can lead to further complications in the policy, especially at the time of claims.

On the bright side, if you live a healthy lifestyle, the chances are high that you will outlive the policy period. Since the basic life insurance plan like pure term plan does not offer any benefits on survival, you can choose return of premium cover to get the premiums paid back as maturity benefit.

So, consider your lifestyle and habits while selecting a sum assured to cover all the possible contingencies

There is no doubt that medical expenses, your child’s education expenses and you’re your/spouse’s retirement expenses are increasing. Statistical data shows the medical inflation increase in the last 3 years.

Source: Global Medical Trends Survey Report

Not everybody can afford quality healthcare treatment from a reputable hospital nor handle the loss of breadwinner in the family. Therefore, it is advisable that you invest in an insurance policy considering the inflation rates and choose an adequate sum assured.

Alongside, you can add a critical illness cover to your life insurance plan to get coverage against various life-threatening diseases. Think of it as the additional benefit for you and your family to deal with a health crisis, and supplement the reduction on, or worse, loss of income earning capability.

If you have already invested in a life insurance policy, ask your insurer about ways to increase the sum assured at different life stages. An adequate sum assured will help your family deal with tough time after you without worrying about arranging for funds.

Instead of running out of funds and spending all your savings for just a few days in the hospital, it is better to select a sufficient sum assured by paying small amounts of premium regularly.

If you suffer from a health ailment or have a medical history of a particular disease, it is best to inform your insurer. It will enable you to select a sum assured that will cover the related treatment charges.

As a rule of thumb, opt for a higher sum assured and include critical illness rider if you or parents/grand parents have had a medical history. It will pay for the expenses of treatment you need, while also covering your life for the inevitable event of death.

Select the Right Sum Assured for a Secure Future

When it comes to the concept of life insurance, understanding a policy might be a challenge. You need not only buy life insurance to fill your checklist for financial protection, like many people do. It is important that you know the value of selecting adequate sum assured. Now that you know the difference between sum assured and sum insured, you are halfway there.

Providing financial protection to your family members is your responsibility as the sole breadwinner. It is why you should keep in mind various factors while selecting the right sum assured.

Various life insurance plans provide protection against death, disease, and disability. What is most important while buying a plan is that it fulfils your needs, provides an adequate sum assured, and is affordable to you.

For instance, you can buy a comprehensive term insurance plan that provide significant cover at low premium. Based on your need, you can also add significant add-ons/riders such as critical illness cover, waiver of premium, accidental death benefit, and return of premium.

While looking for life insurance plans online, you can use an insurance calculator to determine premium rates and the ideal sum assured for better planning of funds. Life insurance has become a quintessential expense in today’s date. With so many lifestyle diseases taking over humankind, it is vital to have a backup in the form of adequate sum assured under a life insurance plan.

In terms of its importance, the considerations surrounding sum assured has eclipsed other concerns such as premium amount among those who are purchasing life insurance in India. This is a finding that has been observed in the recent India Protection Quotient (IPQ) 6.0 survey that was recently conducted jointly by Max Life Insurance and KANTAR.

So, pick the right policy with adequate sum assured and live life worry-free!