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What is the sum assured in an insurance cover?

The sum assured depends upon the income of the person and typically a maximum of up to 10 times the annual income is allowed as the sum assured.

ET CONTRIBUTORS|
Updated: Oct 21, 2019, 11.29 AM IST
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Sum assured should be more that 10 times the annual premium to be entitled to tax benefits.
1. Sum assured is the value of the insurance cover provided at the time of buying the insurance policy.

2. In any case of any eventuality, like death, the sum assured is the amount that is paid to the beneficiary.

3. The sum assured depends upon the income of the person and typically a maximum of up to 10 times the annual income is allowed as the sum assured.

4. Sum assured, if computed in terms of expenses, should be at least 12-15 times the annual expenses with debt obligations, such as a home loan, also accounted for.

5. Sum assured should be more that 10 times the annual premium to be entitled to tax benefits under Section 80C and maturity proceeds being tax free under Section 10(10D).


(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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