What is the Difference between the Sum Assured and the Maturity Amount?

ByShahrukh Ansari

May 3, 2024
what is the difference between sum assured and maturity amount?

In the world of finance and insurance, the secret to getting amazing returns lies in having the proper knowledge of various terms used in the industry. Though it is almost impossible for a layman to keep abreast himself of all these terms, some common but important terms can be learnt easily in today’s fast-paced world. If you are looking to buy a life insurance policy and want more confidence towards buying the best policy, you need to be aware of the sum assured and maturity amount. 

What Does Insurance Mean?

Insurance refers to a kind of financial tool that gives financial security to people during hard times. These days, a large number of people prefer taking insurance due to the fast-changing lifestyle and increasing uncertainty of life, particularly after the COVID-19 outbreak. A health insurance policy has become a necessity for people to meet the heavy expenses that go into availing good quality healthcare services. 

What is the Sum Assured in an Insurance Policy?

Sum assured refers to the total worth of a life cover that is measured on the basis of the policyholder’s financial worth. In other, it is a fixed amount that is provided by the insurance company to the nominee appointed by the policyholder if he or she dies unexpectedly. Sum assured on death is also known as life cover and confirmed at the time of buying the policy.

The sum assured may be inclusive of the benefit given on the add-on rider along with fixed financial value offered at the time of policy maturity. For example, in the case of a savings insurance plan, along with the life cover, the life insurance policy also gives a guaranteed sum assured maturity benefit, and as it is guaranteed, it is called the sum assured on maturity.

Sum Assured Calculation Formula

The sum assured is measured by multiplying the annual expenses of the family by that number and then totalling that to the net liabilities to receive the closer sum assured amount.

What Does the Maturity Amount Mean?

The maturity amount in the field of life insurance refers to the amount that is provided to the policyholder by the insurance company at the completion of the policy tenure. This monetary benefit is given when the policyholder surpasses the period of the life insurance policy.

So, Lets understand the major differences between the sum assured and the maturity amount.

DetailsSum Assured Maturity Benefit
Benefit TypeThe sum assured amount refers to the guaranteed amount given to the nominee in the case of the death of the policy holder.This financial benefit is not guaranteed and a lump sum amount is given to the policy holder when the overall period of the policy is over. 
Benefit GoalThe sum assured death benefit is a financial security for the dependents if the policy holder dies.It helps a person gather funds for your savings and investment goal to meet his future financial obligations.
BeneficiariesNominee is supposed to get the death pay-out and benefit from the life insurance coverage, and the policy holder can get the sum assured of the policy’s maturity.The insurance company will pay the maturity benefit to the policy holder right at the end of the life insurance policy tenure.
Payment TimeIf the policyholder passes away unexpectedly at any point during the policy’s tenure, sum assured is paid to your nominee. It is only paid when the policy’s term is supposed to expire.This amount is only given when the policy tenure is nearing its competion. 
Underlying Factors The sum assured death benefit is decided majorly on the basis of the premium amount paid. The maturity amount depends on the chosen premium, policy tenure interests earned, chosen fun type, etc.
ApplicabilityIt remains applicable to all life insurance policies.It doesn’t remain common in all insurance policies unless the person has chosen for the term insurance with the return of premium. 

Documents Required to Claim for the Sum Assured and Maturity Amount?

It’s time to know to submit a claim for both benefits. Do remember that you can make a claim either online or offline at your own convenience. The major documents you need to submit for both benefits are listed below.

Sum Assured Death BenefitMaturity Benefit
  • Claimant Form
  • Death Certificate
  • Life Insurance Policy document
  • First Investigation Report (FIR) in case of accidents
  • Medical Documents
  • Post-mortem Report
  • Proof of Identity
  • Proof of Residence
  • Bank Details
  • Life Insurance Policy Document
  • Proof of Identity
  • Proof of Residence
  • Bank documents

The Conclusion

When you decide to buy an insurance policy, it is very necessary to understand the difference between the sum assured and the maturity amount. While sum assured gives your family a kind of financial protection in case of your untimely demise, maturity amount lets you build wealth over a period of time by making smaller savings on a regular basis. Both these benefits are intrinsic to most insurance policies. So, make sure you do thorough research on all available options before finalizing a particular life insurance policy. 

By Shahrukh Ansari

In a digital age flooded with content, I stand out as a beacon of creativity and authenticity. With a keen understanding of SEO principles and with my extensive experience in writing for various industries and niches, I bring a wealth of knowledge and expertise to you.

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