The contractual payout amount on a successful claim. The most important number on any policy.
Sum assured is the contractual payout amount on a successful insurance claim — the headline number on every life, CI, TPD, or hospitalisation rider policy.
It's the most important number on the policy: everything else (premium, term, riders) is tooling to deliver this amount to your beneficiaries or you when the event occurs.
Term life: sum assured = death benefit. No cash value during life.
Whole life: sum assured = guaranteed death benefit. Cash value also grows over time, available on surrender (typically lower than total premiums paid in early years).
Participating policies: sum assured may grow over time through reversionary bonuses. Terminal bonuses may add a further amount at claim or maturity.
ILP: sum assured is typically a fixed amount, but the death benefit is often the higher of sum assured or the unit value of the investment.
DIME framework: Debt + Income (years of replacement × annual) + Mortgage + Education (per child × years). Sum = your target sum assured.
Income replacement rule of thumb: 10× annual gross income for primary earners with dependants.
Adjust for: existing wealth (less needed if you have savings), spouse's earning capacity, expected inheritance, dependant ages.
Don't over-insure: every dollar of unnecessary sum assured is a dollar of premium that could have gone into compounding investments.
Term life: largest sum assured, smallest premium. Carries the bulk of the family-protection load.
Whole life: smaller sum assured (typically 1× – 3× annual income) for permanent coverage and estate planning.
Critical Illness: 5× annual income on top of term for treatment + recovery cost.
Hospitalisation IP: not a 'sum assured' product in the same sense — rather, pays bills up to defined annual limits.
Total household coverage often runs 12× – 20× annual income across the stack. Use the Income Tax + Compound Interest calculators to model the long-run cost.
The guaranteed payout amount on an insurance claim. The headline number on every life, CI, TPD, or hospitalisation rider policy. Everything else (premium, term, riders, bonuses) is the mechanism for delivering this amount when needed.
A common benchmark is 10× annual income for primary earners with dependants. The DIME framework refines this: Debt + (Income × years to replace) + Mortgage + Education-for-kids = target sum assured.
On non-participating term policies, no — it's fixed for the policy term. On participating whole-life policies, reversionary and terminal bonuses are added to the sum assured over time, increasing the eventual payout.
No. Surrender pays cash value only (lower than sum assured, often below total premiums paid in early years). Sum assured is paid on death, CI diagnosis, TPD, or maturity (for endowment plans) — not on voluntary cancellation.