Sum insured and sum assured
These two terms, though they seem to mean almost the same thing, are vastly different in an insurance policy.
The sum assured is the benefit that is pre-defined and to be paid to the policyholder in the event of a claim. Relevant to life insurance policies, the sum assured is decided while purchasing the insurance policy. The policy terminates once the assured sum has been paid.
But the sum insured refers to the amount that covers the cost of repair or compensation upon the occurrence of the event insured against.
In general insurance policies, including health insurance, motor and home insurance, the amount of coverage is always the sum insured. This amount involves an upper limit that is pre-set. Since determining an upper limit on material possessions is possible as it wouldn’t surpass the price of the material itself, a sum insured is easier to fix on properties than on one’s life.
An important difference between these two concepts is that in the case of the sum assured, the pre-determined amount of money is paid totally, regardless of the value of the damage at the time of claim, whereas a sum insured policy only guarantees the exact value of the damage. Thus, in health insurance, in medi-claim policies, the benefit amount is called sum insured; in critical illness policies, it is termed sum assured.