Insurance is very well known to be filled with comprehensive glossary of terms and some of them may be difficult to understand. But it is very important for you to understand those terms so that you can decide on the right plan for you. We've compiled a list of 25 important terms and their definitions, which we think are most common, to better help you comprehend the sometimes puzzling world of insurance.
These plans offer a "pension" (or a mix of a lump sum amount and a pension) to be paid to the policy holder or his spouse. In case of death of both during the policy period, a lump sum amount is offered to the next of kin.
Required minimum and maximum ages below and above which the insurance company will not accept applications or may not renew policies.
It means legal transference. It is a method of authorizing another person (a lender) as the principal beneficiary of a death benefit to use as collateral for a loan. If the borrower (policy holder) is incapable to pay, the lender can cash in the life insurance policy of the borrower and recover what is owed.
A beneficiary is a person who is entitled to receive distributions from a trust, will or life insurance policy.
The range of protection provided under a contract of insurance; any of numerous risks covered by a policy.
Days of Grace
It is a provision in most loans and insurance policies. It provides the policy holder with extra days, after the due date, to make the payment of the premiums without any late fee, these extra days period is known as Days of Grace.
It is the amount of benefit on a life insurance policy or pension that will be paid to the beneficiary in the event of the death of the insured person.
It is the period from the date of subscription to an insurance-cum-retirement policy till the date at which the first instalment of pension is received. Deferment period comes in minimum and maximum limit.
It is a life insurance agreement which offers to pay a lump sum cash after completion of specific terms: on its 'maturity' or on death of the policy holder. Maturities can range from ten to twenty years or up to a certain age limit. Some policies also pay out in the case of critical illness.
It refer to certain detailed conditions or situations for which the policy will not provide benefits.
The term refers to a person who holds something in trust for someone else.
It is a basic prerequisite for any insurance body to issue a policy. Entities which are not subject to financial loss from an event do not have an insurable interest and they cannot receive an insurance policy to cover that event.
All conditions concerning individuals that affect their health, susceptibility to injury and life expectancy; it is basically an individual's risk profile.
It is a policy which has expired and is no longer in force due to non-payment of the premium due
It refers to the date upon which the promised face amount of a life insurance policy is paid to the policyholder, if not collected beforehand due to the policy holder’s sudden demise.
The Payment of an agreed amount made to the policy holder at the end of the contracted term of the policy is called maturity claim.
An act of creating, issuing, circulating or causing to be issued an estimation or illustration of any kind that does not denote the correct policy terms, the title or name for any policy.
Moral hazard consist of various risk factors that affects the decision of the insurance company to accept the risk. They contain factors such as state of health, personal habits standard of living and income of insured person.
An act by which the policy holder authorizes another person to receive the policy moneys.
The payment or the regular payment of an amount to be paid by the policy holder for a contract of insurance in exchange for the coverage.
The renewal of a lapsed policy to live status. Reinstatement can only happen after the expiration of the grace period of the due date.
Salary Saving Scheme
It is a scheme which offers payment of premiums by money deduction from the salary of the employees by their employers.
This refer to the value payable to the policy holder in case of him deciding to terminate the policy before the maturity of the policy.
Guaranteed survival benefits are benefits given to the policy holder during or upon completion of the policy tenure. In the case of money back policy, Survival Benefit is a certain pre-determined amount paid to the insured after regular intervals. It is applicable when the insured is alive.
It is the age at which the policy holder starts receiving pension in an insurance-cum-pension plan.