What Is Cover Amount In Term Insurance?

Cover amount in term insurance, also known as the sum assured or the death benefit, refers to the amount of money an insurance company will pay out to the nominee or beneficiary in case of the policyholder's untimely demise during the policyholder's untimely demise the policy term.

In other words, the cover amount is the amount of financial protection provided by the term insurance policy to the policyholder's family in case of their unexpected death. The policyholder decides the cover amount at the time of purchasing the policy and is typically based on their income, liabilities, and the financial needs of their dependents.

Choosing an appropriate cover amount while buying a term insurance policy is important as it will determine the level of financial protection provided to your loved ones in case of your unfortunate demise. Choosing a cover amount that is too low may leave your dependents underinsured, while choosing a cover amount that is too high may result in paying a higher premium than necessary.