Sum assured

The sum assured, sometimes called the cover amount or benefit amount, is the figure you choose when you set up a protection policy. For life insurance it is the lump sum paid if you die during the policy term; for critical illness cover it is the lump sum paid on diagnosis of a covered condition.

Choosing the right sum assured matters more than chasing the lowest premium. Too little cover may leave a shortfall against a mortgage, debts, or your family's living costs, while more cover than you need pushes up the premium without adding value. A common approach is to add up what you want the money to clear or replace, then size the cover around that.

On a level term policy the sum assured stays the same throughout. On a decreasing term policy it falls over time, usually broadly in line with a repayment mortgage. With indexation, the sum assured can rise each year to help keep pace with inflation.