For every individual, it is extremely crucial to have life insurance. And getting one for yourself is now easy, thanks to the number of options available both offline as well as online. For example, sum insured and sum assured are two of the most common terms that are confused with each other.

While both these terms may sound similar, their meanings are different altogether. Simply put, sum insured can be defined as the amount of money that you will receive from your guaranteed return insurance plan. On the other hand, sum insured defines the reimbursement of an insured loss. Still confused? Do not worry as we have detailed the differences between sum insured and sum assured below.

Sum assured can be defined as an amount that is predefined and is given to the policyholder’s beneficiaries in case of the unfortunate event by the insurance company when the unfortunate event takes place. This concept is applicable to life insurance and guaranteed return insurance policies. The premium paid by the policyholder to the insurance company is dependent on the total sum assured.

For example, let us assume that Suresh buys a life insurance policy of Rs 10 lakhs. Then in this case, the insurance company has agreed to pay the aforementioned sum assured amount as a death benefit to Suresh’s nominee in case of his untimely demise.

Similar to sum insured, there are some factors that you should consider while choosing the optimal sum assured amount such as:

• The sum assured should be big enough to cover all your financial responsibilities such as your child’s education/marriage, your family’s living expenses, etc.
• It should financially secure all your dependents such as spouse, kids, etc.
• Age also plays a crucial role. If you are young, opt for a high sum assured as the premium would be very less.

All the above pointers aim to help readers understand the major differences between sum assured and sum insured. Understanding both these terminologies correctly before buying insurance is necessary as they will impact the outcome of your policies.