Definition
Sum Assured on Death
Sum assured on death is the guaranteed minimum amount payable to the nominee on the life assured's death, often defined as the higher of several values in savings plans.
In traditional and ULIP plans, regulations require the death benefit to be at least a defined multiple of premium and a minimum percentage of the sum assured, so the nominee receives a meaningful amount even early in the policy. In ULIPs it is commonly the higher of the sum assured, the fund value, or a multiple of premiums.
This floor ensures the policy retains genuine insurance value rather than just returning the investment. The precise definition affects the sum at risk and hence mortality charges, and is a key term to verify when comparing savings-linked life products.
Related terms
- Sum at RiskSum at risk is the portion of the death benefit that the insurer must fund from pooled premiums, equal to the sum assured minus the policy's accumulated fund or reserve.
- Mortality ChargeThe mortality charge is the cost an insurer deducts to provide pure life cover, based on the insured's age, health and the sum at risk.
- Maturity BenefitThe maturity benefit is the amount a savings-linked life policy pays the surviving policyholder when the policy term ends.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.