What’s the difference between sum assured and sum insured?

12:40 Unknown 1 Comments

Though on the face of it, the difference lies in only two alphabets, in principle the two terms have very different meanings. While a sum assured defines the benefit, sum insured only reimburses the insured loss.
Sum assured: It is a pre-defined benefit that the insurer pays to the policyholder in case the insured event takes place. For instance, in a life insurance policy, the insurer promises to pay the nominee a sum assured-a pre-decided amount-in case of the policyholder’s death. For this amount, the policyholder pays a premium to the insurer. If the policyholder dies during the term of the policy, the insurer will pay the nominee the sum assured and the policy terminates.
Sum insured: A policy that offers a sum insured works on the principle of indemnity. By definition, indemnity means compensation for any damage, loss or injury suffered. Non-life insurance policies such as health, motor and householder’s work on the principle of indemnity.

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