What is "sum assured" in basic life policies?

The term "sum assured" refers to the guaranteed amount that will be paid out by the life insurance policy upon the occurrence of the insured event, typically upon the death of the insured. This amount is predetermined at the outset of the policy and remains constant throughout the policy term. It forms the basis of the financial protection offered by the policyholder to their beneficiaries, ensuring that they receive a specific sum in case of the policyholder's demise.

In basic life insurance policies, the sum assured provides a safety net for the insured's dependents or beneficiaries, helping to cover living expenses, debts, or other obligations that may arise in the absence of the insured. This clear and defined payout aids in financial planning and contributes to peace of mind for policyholders.

The other options do not correctly define "sum assured." The total mortality rate would represent general statistics about insured individuals, not a specific policy benefit. The value at the time of cancellation pertains to the surrender value rather than the sum assured, which remains applicable only upon the insured event. Lastly, the maximum payout limit pertains to benefit caps that may be established in certain policies, but does not define the sum assured itself.