What is the Meaning of Sum Assured in a ULIP?

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Meaning of Sum Assured in a ULIP

Meaning of Sum Assured in a ULIP
  • 10th Jun 2022 |
  • 4,357

Unit-Linked Insurance Plan (ULIP) is an insurance product that also offers investment opportunities. It is a type of linked plan where a portion of the premium is invested in different funds on the basis of the policyholder’s preference. A portion of your premium is invested toward your life insurance coverage, while the remaining amount is invested in equities, bonds, and other market-linked instruments.

There are various components of ULIP that include the sum assured, accrued bonuses, fund value, etc. Since ULIP offers both life insurance and growth on your investment, many people often get confused about what is sum assured in ULIP. Do you ever wonder how to calculate the money your family would receive in case you die during the policy period?

Let’s dive deep to know the details to understand what is the meaning of sum assured:

What is Sum Assured in ULIP?

The meaning of sum assured in insurance is the death benefit paid to the policy’s nominee in the unfortunate event of the insured person’s death. Please note that there is a direct relationship between premium amount and sum assured.

The higher the premium paid, the greater will be the sum assured. However, there is also an insurance element involved in such plans. Some people confuse this with the sum assured. To understand this, let’s compare ULIP with a term insurance policy.

Term Insurance Plan

In case of a term insurance plan, the sum assured is a predetermined amount that is specified in the policy document. The insurance company has to pay the sum assured to the nominee in the event of death during the policy term.

For instance, if you pick a term insurance plan with a sum assured cover of ₹1 crore, your loved ones will receive this entire amount in the unfortunate event of your demise within the policy term. Under this plan, there is no maturity benefit; therefore, the entire premium amount goes to covering the insured’s life. Therefore, a term insurance plan is cost-effective insurance that is known for a higher sum assured value.


In case of ULIP, the sum assured also includes the fund value at the time of claim settlement. Depending on the policy terms, the insurance provider can offer your nominee the sum assured or the fund value or the higher of the two.

In addition, ULIP also offers policyholder a death or maturity benefit, and the sum assured is paid after maturity. Along with the sum assured, policyholders get various other benefits such as a bonus which gets added to the sum assured after a few years of the policy.

How is the sum assured different from the fund value in a ULIP?

Many people find finance-related terminologies quite confusing. The difference between the “Fund Value” and the “Sum Assured” is one of the most misunderstood aspects. Keep scrolling through to get your concepts crystal clear!

The total value of your invested money at a given point in time is known as the fund value. It is determined as per the Net Asset Value (NAV) of your assets and is calculated by multiplying the NAV by the total number of units held. The sum assured is the predetermined amount of money that your loved ones will receive as a death benefit. However, the fund value keeps changing as per the fluctuations of the market.

Since ULIP serves two purposes, investment and insurance, there are two different payout components involved. While the “Sum Assured” comes into effect after the policyholder’s demise during the policy term, the “Fund Value” is paid out if the policyholder survives the policy period or surrenders their policy. Sum Assured is the minimum guaranteed death benefit paid out to the policyholder’s nominee/beneficiaries.

How Do You Get Paid in Case of ULIP?

The payment method in ULIP depends on the type of claim.

  • In case of a death claim: The nominee of the policyholder gets either sum assured or fund value whichever is higher.
  • In case of policy surrender: ULIPs have a 5-year lock-in period, after which you can surrender a policy. The insurance company will cut the surrender charges and pay you the fund value on the day of surrender. This will be calculated as per the NAV of your units.
  • In the case of policy maturity: The total fund value is paid to you at the time of maturity. This includes your invested capital, the returns on your investment, and any bonuses accrued over time.

Points to Know Before Investing in ULIP

Before investing, one needs to pay attention to a lot of detail. Below mentioned are a few pointers that you must note before investing in ULIPs.

  • Sum assured is a guaranteed amount that will be paid out to the policyholder’s family.
  • The minimum lock-in period of the policy will be five years.
  • The grace period for monthly premiums is 15 days and 30 days in all other cases.
  • If the policy is discontinued after 5-years, then the policyholder can revive the policy within two years.
  • Partial withdrawal of the policy is available after 5 years only.
  • For child policies, no withdrawal is allowed until the child attains the age of 18 years.
  • ULIPs offer multiple benefits. The investment decision should be taken from a holistic portfolio perspective in order to ensure that the policyholder can meet all their financial and security-related goals.

Now that you know the details regarding the sum assured in ULIP, you should make an informed decision before buying one. You can use the ULIP calculator to estimate what will be your sum assured.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Why are ULIPs One of the Best Tax Saving Instruments?

The Significance of Number 8,000 in Retirement Planning

Top 4 Myths About ULIP Investments You Should Know

Types of Pension Plans for Your Retirement

What are ULIPs and their Types?

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

What are the Differences Between ELSS ULIP and Mutual Funds?

यूलिप के फायदे (Benefits of ULIP in Hindi)

Can I Surrender My ULIP Policy after 2 Years?

Pros and Cons of Retirement Annuities

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

Retirement and Pension Plans in India- What are Your Options?

Why You Should Invest In An Annuity Plan?

Retirement Planning Guide for Working Men and Women

What Happens to ULIP Premiums Paid if the Market Crashes?

Is it Suggestible to Take a ULIP Plan Linked with a Term Plan?

Single Premium ULIP or a PPF - Which One is Better?

ULIP: Can You Surrender ULIPs or Withdraw Money from It?

FAQs on Taxation of ULIPs

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

Invest for your second innings with a guaranteed savings plan

What are the things to consider before buying ULIPs?

Is ULIP Better Than FD?

What is a Retirement Plan - What are its Features?

5 Reasons to Buy ULIP for a Secured Financial Future

How To Choose The Right Pension Plan?

7 Secrets that can Make Your Post-Retirement Phase Prosperous

Advantages of Pension Schemes and Retirement Plans

Different Types of Retirement Schemes

How should one decide on fund allocation within NPS?

What are the Uses of ULIP?

Worried About Running Out of Money in Retirement? 4 Tips to Avoid This Crisis

How Does ULIP Work in India?

What tax benefits are there on saving for retirement?

How to Choose the Best ULIP Plans to Invest in 2022?

Why ULIP Should Be a Part of Your Investment Portfolio?

Is ULIP A Good Investment Option?

What Are Retirement Pension Plans?

What Are Mortality Charges In ULIP?

Benefits of Early Retirement Plans

Best Insurance Plans for a Guaranteed Monthly Income After Retirement!

5 Common ULIP Myths That You Should Stop Believing

A Quick Guide to Retirement Plans

Retirement Planning at 50? You Are Still Good to Go

Why Should You Invest in NPS?

Are Annuities Great For Early Retirement?

How has ULIP Grown Over the Last 3 years?

Importance of Retirement Planning

Long Term Investment Guide for Your Retirement

Looking for Ways to Earn Lifetime Income in Retirement? Here Are 6 of the Top Options

How Do Annuity Options Work In NPS

Who Gets the Benefit After the Maturity of ULIP: The Proposer or The Life Insured?

Retirement: A New Start to Life!

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

A Beginner's Guide to Understanding 401k Retirement Plan

10 Steps to Figure Out How Much Money You Will Need After You Retire

How Can ULIPs Help You Plan for Your Child's Future?

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

Know Why You Should Stay Invested in Your ULIP Plan

What Are Superannuation Benefits?

Inflation: A Key Factor to Consider into Retirement Planning

Are You Planning an Early Retirement? Here's Why Buying Annuity Plan Will Make Sense

Do Pension Plans Allow any Death Benefits?

NPS for Housewife

यूलिप के 8 शुल्क

Do ULIPs Give Good Returns On Investments?

Tips to invest your voluntary retirement scheme money

Difference Between Unit-Linked Insurance Plans and Non-Linked Plans

6 Signs That You Are Not Financially Ready For An Early Retirement

Top Investment Options for Retirement Planning

Retirement Planning for Millennials

Give Your Retirement Savings A Booster-Shot with Annuities

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

What are the Chances of Losing all my Money in ULIP and How Much Return Should I Expect?

How to Build a Tax-Free Pension Income for Retirement?

What are the minimum and maximum investment in ULIP? Would the Whole Amount Insured in The ULIP Insurance be Invested in the Market?

What is the Death Claim Payable in the Case of ULIP?

Here's Why it's a Good Time to Explore ULIPs as an Investment

Benefits of Early Retirement Planning in India

What are the Instruments Available for Building a Retirement Corpus?

How Can I Achieve My Wealth Goal with ULIP Investment?

Retirement Planning - How To Calculate Your Retirement Premium in India?

How Much Corpus Does One Need for Retirement?

ULIP Plan or Traditional Insurance Plans - Which is better?

Does Having Both ULIP Plan and Other Health Insurance Plan Make Sense?

Here's What Retirement Would Look Like 30 Years From Now

What is ULIP and Its Benefits?

Which Is Better: ULIP or SIP?

Benefits Of Retirement & How Investments Can Help You Enjoy Them

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Top 4 Mistakes To Avoid While Planning For Your Retirement

What are the Charges Levied on ULIP?

Terminologies You Should Understand About Retirement Plans

ELSS vs ULIP: Which is a Better Investment?

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

How Safe is it to Invest in ULIP plans?

How To Keep Your Retirement Accounts from Being Hacked?

Top 6 Reasons Why You Should Get A Pension Plan

Which Pension Plan Suits You best?

Is it possible to live a financially independent life, even after you retire?

Understanding Annuity Plans

How Quickly is Fund Switch Effected in ULIPs? Is it Done the Same Day or After a Particular Number of Days?

What is the Minimum Lock-in Period for ULIP?

How Does Pension Plans in India Works?

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

Demystifying the Retirement Planning Process

How Has NPS Performed in Comparison with Other Instruments?

5 Retirement Planning Tips for a Financially Controlled Post-Employment Life

Importance of financial Planning for Retirement

Un-Retirement - Are You Ready For It?

At What Age Should You Start Your Retirement Planning?

Calculating a Retirement Corpus that can Support Your Lifestyle

How to Win at Retirement Savings?

What is Lock-In Period in ULIPs?

Is the ULIP Policy Surrender Value Taxable?

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

How To Make Most of Your Money After Retirement?

Different Types of ULIP Investments in India

Which are the Best ULIP Plans in India for Children?

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

How can NPS help you save tax?

What are the Rules for Exit From NPS?

Saving for approaching retirement with retirement insurance

Is it Advisable to Withdraw the ULIP Insurance Policy After 5 Years?

Why Should You start Retirement Planning as soon as you start a job?

Why Are ULIPs Called Flexible Investments?

What are the Advantages and Disadvantages of ULIP?

Is ULIP a Good Option for People Above 60?

What is Fund Value in ULIP?

Why Should I Invest in ULIP?

What is the difference between Life Insurance and ULIP?

What is NAV in ULIP, and How is it calculated?

ULIPs or Pension Plans – Which is a Better Retirement Plan?

Is ULIP a Complex Financial Product?

Types of Retirement Plans

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

Is It Worth Buying ULIP Plans For 10 Years?

What are the Benefits of ULIP - Explained

How Does NPS Work?

Ten Signs That You're Ready to Retire

Top 6 Flexible Benefits That ULIPs Offer

What is an Annuity Plan, and How Does Annuity Plan Work?

5 Steps to Gift a Smart Retirement Plan to Your Parents

How To Calculate The Present Value And Future Value Of Annuities?

What To Do With Your Retirement Accounts During An Employment Lapse?

Can NRIs Invest in ULIP Plans Offered in India?

8 Charges in ULIP That You Must Know

5 Notable Investment Options for Retirees

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

Retirement planning with a systematic life insurance plan

What is Partial Withdrawal in ULIPs?

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

Why Should Retirement Planning Be on Top of Your Priority List?

Save Early to Keep Living Your Dreams Post Retirement