Sum Assured Vs Sum Insured: Before taking an insurance policy, investors should know its technical terminology. If you have taken a life insurance or mediclaim policy, then you must have noticed that two words appear again and again in it. Which are very similar but both are very different in themselves. We are talking about ‘sum assured’ and ‘sum insured’. Many people think that it is the same, but it is not so. Every person taking insurance should have a clear understanding of the meaning of these terms. If you know its difference then it can prove beneficial for you. Come, let’s know about it here.
what is sum assured
Sum Assured or Sum Assured is the value of the insurance cover, which is decided by the insurance company for the policyholder while buying the insurance policy. This is a kind of guaranteed amount that the policyholder gets. It is also known as cover or coverage amount. This is the total amount for which the person insures. Sum Assured is the amount that the insurance company pays to the beneficiary in case of any untoward incident like sudden death. The sum assured should be 10 times the annual premium to be eligible for tax benefit under section 80C. The amount received on maturity of the policy is tax free under section 10(10D).
who is sum insured
Sum Insured is based on the principle of indemnity. In case of injury or illness of the insured or any of his property such as vehicle, property, expensive goods etc., in case of loss or theft, its (Sum Insured) benefit is given as compensation.
Non-life insurance policies like health, motor, etc. Insurance policies work on indemnity basis and cover the loss caused to the insured. This is called Sum Insured.
That is, it is used in all pure risk general insurance policies. For example, in a health insurance policy, someone has been sum insured of Rs 2 lakh. That is, if the person taking the insurance gets sick and is admitted to the hospital, then the insurance company will bear his expenses up to Rs 2 lakh. Sum Insured is not a monetary benefit, it is a compensation for the expenses incurred by the insured. If the expenses exceed the sum insured, the rest of the expenses have to be borne by the insured.
benefits of both
Sum Assured Vs Sum Insured: Both Sum Assured and Sum Insured have one thing in common and that is, higher the Sum Assured and Sum Insured, the higher will be the premium of the insurance. There are also many such insurance policies that offer both sum assured and sum assured benefits.
For example, some insurance companies have started offering such policies, which not only cover medical expenses but also provide predefined benefits. This benefit is available on the occurrence of a medical event already mentioned in the policy. This type of dual benefit plan is offered by both life insurance and non-life insurance companies. After this information, any person can take insurance according to his opinion.