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Understanding The Difference Between Sum Assured And Sum Insured

Published On Dec 04, 2020

With the costs of healthcare skyrocketing in recent years more and more Indians are becoming aware of the benefits of having health insurance. Having a health insurance policy adds a layer of protection by ensuring that your medical needs are taken care of in moments of crisis and that such occasions do not affect your financial stability. With insurance available for purchase online, however, it has become crucial for us to understand what we are purchasing before we buy and compare plans. Some basic terms are crucial for understanding health insurance. The Sum Assured and Sum Insured are two such terms that people often find confusing. In this article, we will tell you everything you need to know about it.

What is the meaning of Sum Insured in Health Insurance?

In health insurance, the sum insured is the amount that is given to the policyholder for any unforeseen medical care costs such as hospitalisation, surgery, etc. The sum insured is not a benefit but rather just the reimbursement of the cost that would otherwise be born by the insured person. In cases where the amount that is required is less than or equal to the sum of the policy, the insurance company reimburses the entire cost. However, if the cost is higher than the sum insured the extra cost must be borne by the policyholder.

What is the meaning of Sum Assured in Health Insurance?

Sum assured in insurance is the sum of money that you receive at the end of your insurance tenure. This is a predetermined amount that is mentioned in the insurance policy during the purchase. It remains the same in the beginning and end of the insurance tenure. This is mostly applicable to life insurance. For example, if a person is guaranteed 15 lakhs in the event of the insured's death this amount will receive the amount with no changes.

Understanding the Difference Between Sum Insured and Sum Assured

Understand the difference between the sum assured and sum insured from the table given below:


Sum Assured

Sum Insured

Type of Policy

Applicable non-life insurance; health and motor insurance mostly.

Applicable to life insurance policies.

Nature of Policy

Based on the indemnity principle, providing reimbursement for losses or damage.

Fixed amount, predetermined and paid by the insurer in case of an event such as death or end of the policy tenure.

Benefit Type

Only reimbursement, no monetary benefit.

A monetary benefit provided after the end of the policy's tenure.


In a nutshell, it is crucial to understand the basic terminology of insurance before purchasing it. However, these terms can often be extremely confusing. In this article, we explained the difference between the sum insured and the sum assured how it is applied. To know more about insurance and health insurance, in particular, you can read similar articles by clicking here. You can also purchase health insurance online by simply taking a few simple steps. Comparing health insurance companies, checking the plans they offer, the network of cashless mediclaim hospitals, calculating premiums, and renewal of existing policies can be done with just a few clicks.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.


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