In the context of insurance, what does 'capital sum' typically refer to?

The term 'capital sum' is primarily associated with the amount of money that an insurance policy will pay out in the event of certain specified losses, particularly in the context of accident or life insurance policies. This capital sum is predetermined and is typically linked to specific events like accidental death or dismemberment.

In these policies, if a covered event occurs, the insurer pays the capital sum directly to the beneficiary or the insured. For example, if a policyholder suffers an accident that results in a permanent disability, the capital sum might represent the financial compensation that reflects the severity of the loss.

This concept is critical in insurance as it helps policyholders understand the potential financial protection their policy offers in the event of certain types of loss, which is distinct from simply referring to the total premiums paid for the coverage, the overall value of the policy, or what might be left after other claims have been processed. The focus of the capital sum is specifically on the compensation for particular losses as outlined in the policy terms.