Meaning Of Sum Assured In A ULIP


An insurance policy with investing prospects is a unit-linked insurance plan (ULIP). A portion of the premium is invested in various funds according to the policyholder’s preferences in this form of a linked plan. The remainder of your payment is invested in equities, bonds, and other market-linked products, with a part going toward your life insurance coverage. 

The sum assured, accrued bonuses, fund value, and other elements are only a few of the parts that make up a ULIP. Due to the fact that ULIP plans provide both life insurance and growth on your investment, many consumers are unsure of what the ULIP amount assured is. Do you ever wonder how to determine how much money your family would receive if you passed away while the policy was in effect? You can use a ULIP calculator to estimate future returns and the value of a ULIP investment.

Let’s delve into the specifics to discover the sum assured’s meaning: 

What does ULIP’s sum assured mean? 

The death benefit given to the designated beneficiary of the policy in the tragic event of the insured person’s passing is referred to as the sum assured in insurance. The sum promised will increase in proportion to the amount of premium paid. However, such plans also include an insurance component. This is sometimes mistaken with the money assured. Let’s contrast ULIP with a term insurance policy to better comprehend this. 

Term insurance plan

The sum assured in a term insurance plan is a predefined figure that is listed in the policy contract. In the event of a passing away during the policy term, the insurance company is required to pay the nominee the sum assured. 

In the terrible event that you pass away within the policy term, for example, if you choose a term insurance plan with a sum assured cover of $1 crore, your loved ones will receive the full amount. Since there is no maturity benefit under this plan, the full premium sum is used to pay for the life insurance of the insured. Term insurance is, therefore, affordable insurance that is renowned for having a larger sum assured value. 


The fund value at the time of claim settlement is included in the sum insured for ULIPs. The insurance company may give your nominee the sum promised, the fund value, or the greater of the two amounts depending on the terms of the policy. ULIPs have a 5-year ULIP lock-in period.

Life insurance is also a part of the ULIP plans. In case the policyholder loses their life, their family will recieve a sum assured. Policyholders also receive a number of extra benefits, such as bonuses that are added to the sum assured once the policy has been in effect for a while. 

How does the fund value in a ULIP differ from the sum assured? 

Finance-related terms can be rather complex for many people. One of the most confusing parts is how the “Fund Value” and the “Sum Assured” differ from one another. To ensure that your notions are completely clear, keep scrolling! 

The fund value is the total worth of your investments as of a specific date. The Net Asset Value (NAV) of your assets is used to compute it, and it is derived by dividing the NAV by the total number of units held. The set sum of money that will be given to your loved ones as a death benefit is known as the sum assured. However, the fund’s value is always shifting due to market alterations. 

There are two different payment components since ULIPs have two functions: investing and insurance. The “Fund Value” is paid out whether the policyholder lives through the policy time or surrenders their policy, but the “Sum Assured” only becomes effective once the policyholder passes away within the policy term. 

How is payment made in a ULIP plan? 

The type of claim will determine the ULIP payment method. 

  • In the event of a passing away claim, the policyholder’s nominee will receive the higher of the sum assured or fund value. 
  • In the event of a policy surrender, ULIPs have a 5-year ULIP lock-in period, following which a policy may be cancelled. On the day of surrender, the insurance provider will waive the surrender fees and give you the fund value. Your units’ NAV will be used to determine this. 
  • When insurance reaches its maturity date, you are given the whole fund value. This comprises your initial investment, investment returns, plus any bonuses that have accumulated over time. 

You should make a well-informed choice before purchasing a ULIP now that you are aware of the specifics of the sum assured. To calculate your expected sum assured, utilise the ULIP calculator.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.


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