Accident
An event or occurrence causing damage/injury to an entity, and is unforeseen and unintended.
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in instalments on permanent total disability and waiver of subsequent premiums payable under the policy.
Age Limits
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent
An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Annuity Plans
These plans provide for a “pension” ( or a mix of a lumpsum amount and a pension ) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lumpsum amount is provided for the next of kin.
Application Form
Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
Assignment
Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a seperate deed. Assignment can be of two types Conditional absolute
Beneficiary
The person(s) or entity(ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Cancelable
A contract of health insurance that may be cancelled during the policy term by the insurer or insured.
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required;
2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured.
Convertible Whole Life Policy
A mix of “whole life policy” and “endowment policy”, it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibility of converting the policy to an “endowment” policy after five years of commencement.
Coverage
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Days Of Grace
Policy holders are expected to pay premium on due dates. a period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace.
Deferment Period
The period between the date of subscription to an insurance-cum-pension policy and the time at which the first instalment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
Depreciation
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of the property at time of loss.
Double/Triple Cover Plans
These offer to the beneficiaries double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.
Embezzlement
Fraudulent use or taking of another’s property or money which has been entrusted to one’s care.
Endowment Policy
The assured has to pay an annual premium which is determined based on the assured’s age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.
Excess And Surplus
Insurance 1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy.
2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician’s hands or the multiple perils of a convention, for which coverage is unavailable in the normal market.
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Family Insurance
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Fiduciary
A person who holds something in trust for another.
Fire Insurance
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a program developed by the Central government.
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annuity of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after the deferment period.
Group Life Insurance
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Guaranteed Policies
These are policies where the payment stays fixed.
Indemnity Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Insurable Interest
A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.
Insurability
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual’s risk profile.
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Insured The person whose life is covered by a policy of insurance.
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.
Lapsed Policy
A policy that has been terminated and is no longer in force due to non-payment of the premium due.
Limited Payment
Life Policy Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever the death of the policyholder occurs. Again, this policy can also be of the “with profits ” or “without profits” type.
Loyalty Additions
The loyalty addition is given upon the maturity of the policy, and not before. It’s a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is our effort to further share its surplus after valuation with the policyholders.
Life Assured
The person whose life is insured by an individual life policy is called life assured.
Maturity
The date upon which the face amount of a life insurance policy, if not previously invoked due to the contingency covered (death), is paid to the policyholder.
Maturity Claim
The Payment to the policyholder at the end of the stipulated term of the policy is called a maturity claim.
Misrepresentation
Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not reflect its true nature.
Money Back Policy
Unlike endowment plans, in money-back policies, the policyholder gets periodic “survivance payments” during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid to date, and no further premiums are required to be paid. These types of policies are very popular since they can be tailored to get large amounts at specific periods as per the needs of the policyholder.
Moral Hazard
The risk depends on the need for insurance, state of health, personal habits standard of living, and income of insured person. Moral hazard is the risk factor that affects the decision of the insurance company to accept the risk.
Nomination
An act by which the policyholder authorizes another person to receive the policy money. The person so authorized is called Nominee.
Non-cancelable policies
Such policies stay in effect regardless of whatever might happen and as long as the premium is paid from time to time.
Premium
The payment, or one of the regular periodic payments, that a policyholder makes to an insurer in exchange for the insurer’s obligation to pay benefits upon the occurrence of the contractually specified contingency (e.g., death).
Premium Back Term Insurance Plans
These provide for a refund of all the premiums paid, in the event of the life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event death occurs during the policy term.
Reinstatement
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the expiration of the grace period. The company may require evidence of insurability (and, if health status has changed, deny reinstatement), and will always require payment of the total amount of past due premium.
Risk
The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability, and the protection against catastrophic loss, is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency. That is, although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as underwriting.
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.
Sub Standard Risk
A person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate, or dangerous habits.
Surrender Value
The value payable to the policyholder in the event of his deciding to terminate the policy before the maturity of the policy.
Survival Benefit
The payment of the sum assured to the incurred person has become due in installments under a money-back policy.
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan.
Whole Life Policy
Premiums are paid throughout the life time of life assured . This can be with profits or without profits ( A “with profit” policy is eligible for various bonuses declared by LIC every year, while a “without profits” policy does not have this privilege ).
With-Profit policy
Policies entitled to a bonus, which is paid at the time of claim-death or maturity with-profit policies.
Without-Profit policy These policies are not entitled to participate in bonuses.
Policyholder
Also known as the policy owner, this is the person who owns the policy. The policyholder is the one who buys the insurance and pays regular premiums.
Life Assured
This refers to the person for whom the insurance is bought. This may or may not be the same as the policyholder. For example, if you buy insurance for yourself, you will be the policyholder and the life assured. But, if you buy insurance for a parent, and pay the monthly premiums for them, then you will be the policyholder while the life assured will be your parent.
Nominee
The nominee or the beneficiary is the person who inherits the sum assured in case the life assured passes away during the term of the policy. This is normally chosen by the policyholder and is usually a family member or a close relative.
Sum Assured
This is the amount that the insurance company pays to the nominee on the death of the life assured. For example, let us assume that you buy a term life insurance policy for yourself and nominate your wife as the beneficiary. You will be required to fix a sum assured at the time of purchase. Let us say that the sum assured is ₹ 1 crore. Now in the unfortunate event of your death during the tenure of the policy, your wife will receive the sum assured of ₹ 1 crore from the insurance company. The sum assured is also sometimes referred to as the cover.
Policy Term
This is the period for which the insurance policy is active or valid. This period can differ from policy to policy and can range from anywhere between a year to a lifetime. Let us say that the policy term for an insurance policy is 50 years. Now if the person who is the life assured for the policy dies during this period, the insurance company will be liable to pay the sum assured to the nominee. This is also called policy tenure or policy duration.
Premium
This is a fixed amount that the policyholder pays the insurance company in return for insurance. You can choose between different plans of payment like monthly, quarterly, annually, etc. The premium is an important aspect of an insurance policy.
Payment Term/Mode
The payment term or mode refers to the different ways in which you can pay the premium to the insurance company. There are primarily three types of payment modes.
Regular Pay
In this method, the policyholder pays premiums throughout the policy term.
Limited Pay
In this plan, the policyholder can choose a certain period for the payment of the premium. For example, if you choose 5 years, then you have to pay premiums for only 5 years while the policy remains in force for the entire term selected by you.
Single Pay
In this method, the policyholder pays the premium in one go. This is usually paid at the time of purchasing the insurance policy.
Death Benefit
The death benefit is the total sum that the insurance company pays to the nominee in case of the policyholder’s death during the policy term. This is generally equal to the sum assured. However, in insurance plans where riders are involved, the death benefit can also be higher than the sum assured.
Maturity Benefit
Some policies pay the policyholder an amount in case he/she survives the policy term. This is known as the maturity benefit.
Riders
These are optional add-ons to your existing term life insurance policy. They are over and above the terms of your policy. They can be benefits like an accelerated critical illness pack or an accidental death benefit pack. The policyholder is liable to pay extra for riders at the time of buying the policy.
Claim
If the life assured dies during the tenure of the policy, the insurance company does not directly pay the sum assured to the nominee. You are required to file a claim to the company, after which you receive the coverage.
Free Look Period
Imagine you buy a term life insurance today, but change your mind about it later. An insurance policy usually comes with a free look period which is the duration within which you can terminate the policy without paying penalties. This period can differ from policy to policy.
