Sum Assured vs Sum Insured

Some of the commonly heard terms in insurance are Sum Assured and Sum Insured. Though many people use these terms interchangeably, they are fundamentally different. Sum Assured is a guaranteed amount that is paid to you when the insured event takes place. Sum Insured is the amount paid as compensation equal to the actual loss incurred by you. Let us understand the difference between Sum Assured vs Sum Insured.

Sum Assured

Sum Assured is a pre-decided amount that is paid by the insurer to you when the insured event happens. The Sum Assured term is usually used in life insurance policies in which the insured event is your demise. Since the Sum Assured in a pre-decided amount, the premium payable for a policy depends on this amount.

Sum Assured means a monetary benefit is receivable either by your or your family.

Example: Assume you have a life insurance policy of Rs.1 Crore. In case of your demise, the nominee will receive Rs.1 Crore.

Sum Insured

Sum Insured is the maximum amount for which your insurer will provide compensation for the insured event. This term is used in non-life insurance a.k.a general insurance. These policies work on the concept of indemnity i.e., compensation is given to the insured which is equal to the value of the loss/damage incurred.

The amount mentioned on the policy document as Sum Insured indicates the maximum amount that will be compensated for the loss/damage you incur. Depending on the nature and value of the loss/damage that has occurred, compensation is given.

Also know the Difference between Life Insurance and Health Insurance


  1. Assume you have a health insurance policy with a Sum Insured as Rs.5 lakhs. It means that your insurer will reimburse you for any hospitalization expenses up to a maximum amount of Rs.5 lakhs. If your hospitalization expense is Rs.1.5 lakhs only, then the same amount is reimbursed to you by the insurer.
  2. Assume that your car is of value Rs.10 lakhs and is insured for the same. If there was an accident that damaged your car, and the cost of repair is determined to be Rs.1 lakh, then the same amount will be compensated to you.

Sum Assured vs Sum Insured

Sum AssuredSum Insured
Applicable to Life InsuranceApplicable to Non-life Insurance
A pre-decided fixed amount is given when the insured event such as demise occurs.Only an amount equal to the loss/damage is paid to you.
It is a monetary benefit that is receivable by the insured or their family.It is a compensation/reimbursement receivable for the loss/damage incurred.

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