| Serial No | Terminologies Used in Insurance | Description |
|---|
1
| Accidental Benefit
| The accidental benefit is paid to the nominees if the policyholder passes away in an accident. There are accidental, temporary and permanent disability riders as well. Learn more about disability riders here.
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2
| Annuity
| It is a contract between the policyholder and the life insurance company where the policyholder makes payments and receives regular payouts in the future. Read more about annuity.
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3
| Cash Value
| Cash value is the portion of the policy that earns interest. Also, it may be available to withdraw or borrow against if an emergency occurs.
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4
| Claim Process
| It is a formal request to the insurance company for compensation for the losses covered under the life insurance policy. The insurance company validates the claim, and if approved, it issues the payment to the interested party.
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5
| Claim Settlement Ratio
| Claim Settlement Ratio, or CSR, refers to the percentage of claims settled by the life insurance company during the previous financial year. It is an indicator of how quickly the nominees are paid the claims. Hence, it is an important factor to be considered while choosing a life insurance company.
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6
| Death Benefit
| Death Benefit is a common term that you will come across frequently. It is the amount paid to the nominees if the policyholder passes away during the policy term. In a term insurance policy, this amount equals the sum assured.
However, other life insurance policies may include accrued bonuses and loyalty additions.
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7
| Exclusions
| Exclusions are certain things or events that are not covered under a life insurance policy. If any claim is made on these exclusions, the insurance company is not liable to pay any compensation or benefit.
For example, most term insurance policies include suicide as an exclusion during the initial policy period. If the policyholder dies by suicide within a specified timeframe, usually the first year, the death benefit may not be payable, subject to policy terms and conditions.
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8
| Free-Look Period
| A 15-30 day window that is provided to all policyholders for reviewing and accepting their policies. If the policyholder decides not to proceed with the policy, they can do so within the free-look period.
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9
| Grace Period
| A grace period is an additional window, usually ranging from 15 to 30 days after the premium due date, during which policyholders can pay outstanding premiums without the policy becoming inactive.
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10
| Insurer and Insured
| The insurer is the insurance company that provides financial coverage, while the insured is the individual whose life or asset is covered under the policy.
Know more about an insurer and the insured.
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11
| Lapsed Policy
| A life insurance policy lapses when premiums are not paid, even after the grace period. The policy doesn't remain in force.
Some insurers offer a revival of the policy. If the unpaid dues are cleared by the policyholder, the policy is revived.
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12
| Life Assured
| The life assured is the individual whose life is covered under a life insurance policy, and upon whose death or survival (as per policy terms), the insurance benefits become payable.
For example, if Viraat purchases a life insurance policy for himself, he is both the policyholder and the life assured. However, if Viraat purchases a policy for his wife and pays the premiums, Viraat is the policyholder, and his wife is the life assured.
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13
| Maturity
| The date on which the full sum assured of a life insurance policy is paid to the policyholder, provided the insured event (death) has not occurred earlier.
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14
| Maturity Benefit/ Survival Benefit
| It is the amount a life insurance company pays when the policy terminates. This amount is generally guaranteed; however, in some plans, accrued bonuses and loyalty additions are included in the maturity benefit.
Learn in detail about maturity benefits.
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15
| Nominee
| A nominee, or beneficiary, is the person chosen by the policyholder who will receive the death benefits of the plan when the policyholder passes away.
It is generally a family member.
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16
| Paid-up Value
| Under this option, the sum insured is reduced in proportion to the number of premiums paid by the policyholder. If the policyholder discontinues the premium payment after a specified period, the insurance company will offer the policyholder an option to convert the policy into a reduced paid-up policy. The benefits will also be reduced as per the new sum assured. That benefit is known as paid-up value.
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17
| Policyholder
| The owner of the life insurance policy is the policyholder. Generally, a policyholder may or may not be the life assured in the policy. However, they pay the premiums for the policy.
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18
| Policy Renewal
| Policy renewal is the process of renewing the existing policy. The contract is extended by the policyholder to continue their coverage for a specified period.
Rather than buying a new life insurance policy, a lot of people consider renewing their plans.
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19
| Policy Tenure
| It is the duration for which the insurance policy offers coverage. The tenure could range from 1 year to 100 years, depending on the policy.
Generally, whole life plans offer life cover till 99 or 100 years of age.
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20
| Premium
| Premium is the amount that the policyholder pays to the insurance company for the insurance coverage. Different life insurance companies offer different premium payment frequencies to the policyholders. A policyholder gets to choose from monthly, quarterly, annual, limited premium pay, and single premium pay options.
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21
| Revival Period
| The life insurance policy lapses if the premium is not paid, even within the grace period. However, policyholders can re-activate it by paying the premiums within a specified period after the end of the grace period. That specified period after the grace period is the revival period.
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22
| Riders
| Riders are optional add-on features that enhance the life insurance policy. There are different types of riders offered with different types of plans:
- • Accidental Death Benefit
- • Critical Illness Cover
- • Child Support Benefit
- • Waiver of Premium
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23
| Sum Assured (Coverage)
| It is the guaranteed amount the nominees/beneficiaries will receive if the policyholder passes away during the policy term.
Sum Assured is chosen by the policyholder during the inception. With some policies, you can increase the sum assured during the policy tenure for an increased premium.
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24
| Surrender Value
| If the policyholder decides to discontinue their life insurance policy before maturity, the insurance company pays an amount to the policyholder, known as surrender value. However, not all life insurance plans offer this feature.
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25
| Underwriting
| Underwriting is an important process of issuing a life insurance policy. It is done to evaluate the risk involved in issuing an insurance policy to the individual who has applied for a policy.
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26
| Vesting Age
| The vesting age is when the policyholder receives the income as guaranteed in their pension plan.
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