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Simplifying Life Insurance in India
Differences Between Sum Assured and Death Benefit
Source: myinvestmentideas.com
What is Sum Assured?
Sum assured is the amount that a nominee will get in case the insured individual dies within the policy’s terms. Policyholders determine this sum assured amount while taking the policy coverage.
It is a guaranteed amount that an insurance provider must give to a nominee in case the insured individual’s death comes under the inclusion criteria of the policy.
What is Death Benefit?
It is the total minimum amount that an insurance company must pay to nominees of policyholders if they die within the policy period.
The value of this benefit is variable. Death benefits may include bonuses, riders’ benefits, etc., in addition to the sum assured amount.
Sum Assured Vs Death Benefit
| Parameter | Sum Assured | Death Benefit |
| Definition | It is a predetermined amount that an insurance company will have to provide to nominees in case of the sudden demise of insured individuals. So, it is also a death benefit. | Death benefit is also the amount that nominees get after the death of a covered individual within the policy term. However, its total value is not predetermined. This is because claimable amounts of additional benefits are variable. |
| Amount | Sum assured amount is lower than the death benefit. | Death benefits include the sum assured as well as additional bonuses. So, it is higher in amount. |
Knowing these inherent differences between sum assured and the death benefit is important to understand the exact financial coverage your family gets under the policy. You should choose a suitable life insurance plan keeping their needs in mind.
FAQs about Sum Assured and Death Benefit
How to claim death benefits of a life insurance policy?
What is the maturity benefit?
What are the documents that I need to provide to claim death benefits?
Following are some important documents that you will need to submit to claim death benefits:
- Original policy papers
- Death certificate
- Age proof of the policyholder
- ID proof of nominee
- Hospital records
- Medical certificate
You may have to submit a Police FIR and post-mortem report if the death is unnatural.
What is the minimum death benefit that an insurance company will have to provide?
IRDAI mandates that insurance companies will have to pay a minimum death benefit, as mentioned below:
- If policyholders are below 45 years old, the minimum death benefit will be at 10 times of premium.
- If policyholders are above 45 years old, this benefit will be at least 7 times of premium.
Is the death benefit always equal to the sum assured?
Important Guides Related to Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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