What is the Maximum and Minimum Sum Assured in Term Insurance?

What Is the Maximum Allowable Sum Assured?

What Is the Minimum Allowable Sum Assured?

Examples of Maximum and Minimum Sum Assured in a Term Insurance Plan

How to Choose the Right Sum Assured?

Formula to Determine the Sum Assured You May Need

FAQs About Maximum and Minimum Allowable Sum Assured

Do I get a sum assured in a life insurance plan? up-arrow

Yes, a life insurance plan also comes with sum-assured benefits. However, in a life insurance plan, you can also get a maturity benefit on top of the sum assured. You will get a lump sum amount after your policy matures.

Will my nominee get the sum assured in case of death due to natural disasters? up-arrow

No, term insurance plans generally do not cover death due to natural disasters. Before purchasing a term insurance plan, you should ideally check the inclusion and exclusion criteria to understand when you will and will not get the policy benefit.

Does the sum assured come with any tax benefit? up-arrow

Yes, according to the Section 10 (10D), the entire death benefit can be exempted from any tax obligations. However, for this, the total premium towards the policy must not exceed 10% of the sum assured value in case the policy is purchased after 1 April 2012. The limit is 20% for the policies purchased before 1 April 2012.

What are the documents do nominees need to provide to get the sum assured? up-arrow

You need to provide the following documents to get the sum assured amount:

  • Original policy paper
  • Filled in claim form
  • Photo ID proof of nominee
  • Bank account details of nominee
  • Medical reports and death certificate
  • Doctor’s statement.