Sum insured is applicable to insurance products like health and motor
Sum assured is used in reference to investing in a life insurance plan
This is the difference between sum assured and sum insured
While investing in insurance policies is the need of the hour, you need to understand the nuances before you sign up. Be it health insurance or life insurance, getting your basics right is essential. Understanding the technicalities helps you get a clear idea of different terms and conditions of your policy.
Some of most common terms used are sum insured and sum assured. Both of these are vital when it comes to an insurance policy. Knowing sum insured vs sum assured is important as these components determine the total coverage of your insurance plan. However, in most cases, these terms are used interchangeably and confused for one another. Do they mean the same thing? No, they don’t.
To understand more about what the sum insured amount refers to and the difference between sum assured and sum insured, read on.
Additional read: 5 Tips to Buy the Best Family Health Insurance Policy
Be it health insurance, home, medical or motor insurance, sum insured is used for insurance products that are not life-related . However, the benefit you get is not monetary and is a reimbursement of expenses borne by you during a particular crisis. For instance, if your expenses are equal to or less than the sum insured, your insurance provider reimburses the complete amount. In case your expenses exceed the sum insured, you will have to bear additional costs yourself. In simple terms, the sum insured definition can be explained as the compensation amount paid by your insurance company in the event of loss, injury or hospitalization.
Now that you are familiar with the sum insured meaning, you need to understand why choosing the right sum insured amount is important. While this amount helps you manage your medical expenses with ease, it also helps you boost your financial health. Choosing a higher amount for the sum insured can help you tackle a crisis without disrupting your savings. In case you opt for a family floater plan, where your immediate family members are covered under a single coverage, opting for a higher sum insured amount is essential. This way multiple claims can be managed throughout the year to ensure all members included in policy get proper coverage.
Sum insured is dependent on certain factors such as your age, lifestyle and health ailments, when it comes to a health policy. Consider all of them before you choose the sum insured amount. The premium you need to pay while availing a plan also depends on the sum insured. If you choose a higher amount for sum insured, your premium will also be higher.
Like the sum insured, even the sum assured has a direct impact on your premium amount. If you choose a higher sum assured, you’ll have to pay a higher premium annually, monthly or quarterly.
Before choosing the sum assured, consider some of these factors.
|SUM INSURED||SUM ASSURED|
|Applicable for non-life insurance products such as health and motor insurance||Applicable for life insurance policies|
|Provides compensation for loss or hospitalization as per the indemnity principle||Pre-determined amount paid during event of death or after the policy term ends|
|There are no monetary benefits||There are monetary benefits|
Now that you are aware of these important terms, choosing the sum insured and sum assured amount becomes easier. Whether it is life insurance or health insurance, invest in a plan that best suits your requirements and pockets too.
Browse through a range of rewarding healthcare plans of Aarogya Care on Bajaj Finserv Health. With a claims ratio that outdoes competitors along with other features like preventive health packages, free doctor consultations and cashless claims, they can help you prioritize healthcare and avail medical treatment affordably.