Sum Insured
The sum insured is the maximum amount your insurer will pay under your policy if a valid claim is approved.
The sum insured is the amount of cover you choose when taking out an insurance policy. It represents the maximum benefit your insurer may pay for a covered claim, subject to your policy's terms and conditions.
For some types of insurance, such as Life Cover or Trauma Cover, the sum insured is usually paid as a lump sum if you meet the policy's claim definition. For example, if you have $500,000 of Life Cover, that is the maximum amount that could be paid if a valid claim is made.
Choosing the right sum insured is an important part of protecting yourself and your family. If your cover is too low, it may not be enough to meet your financial needs if the unexpected happens. If it's higher than you need, you could be paying more in premiums than necessary.
As your life changes, your insurance needs can change too. Buying a home, starting a family, paying off debt or changing jobs can all affect how much cover is appropriate. Reviewing your sum insured regularly helps ensure your policy continues to provide the protection you need.
Why It Matters
Your sum insured determines the maximum financial support available under your policy. Choosing the right amount of cover can help protect your lifestyle, your family and your financial future if you need to make a claim.
Common Misunderstandings
"The sum insured is what my policy costs."
No. The sum insured is the maximum amount your insurer may pay, while your premium is the amount you pay to keep your policy active.
"More cover is always better."
Not necessarily. Your sum insured should reflect your financial needs and goals, as higher cover generally means higher premiums.
"I never need to review my sum insured."
Life changes over time, and your insurance should too. Regular reviews help ensure your cover remains appropriate.
"Every claim pays the full sum insured."
Not always. The amount paid depends on the type of policy, the claim and your policy's terms and conditions.
FAQs about Sum Insured
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This depends on your financial commitments, debts, income and the people who rely on you. An adviser can help you calculate an appropriate amount.
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Yes. Many insurers allow you to increase your cover, although additional underwriting may be required.
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Generally, yes. A higher sum insured usually results in a higher premium.
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It's a good idea to review your cover whenever your circumstances change, such as buying a home, having children or taking on new financial commitments.
Choosing the right sum insured is one of the most important decisions when setting up your insurance. If you're unsure whether your current cover is enough, or if your circumstances have changed, talk to a New Vision Financial Services adviser. We'll help you review your needs and ensure your cover continues to protect what matters most.