You buy life insurance policy for a reason. The reason is to get financial security, in monetary terms, for your dependants in case of your death. This money is what is called the Sum Assured.
Fixing the correct amount of Sum Assured is a crucial activity at the time of getting a life insurance policy. Here is what you should know about it.
What is Sum Assured?
At the time of signing a life insurance contract, the insurer and the buyer agree upon a certain amount of money that will be payable upon the death of insured. This amount is the Sum Assured will go to the nominee or your beneficiary as per the policy.
Fixing the Sum Assured Amount
Sum Assured depends on numerous factors such as your total net assets, family’s current and potential fixed annual income and expenditure, your age and the age of your dependents, and any loans or liabilities due.