Don’t let those terms

confuse you!

Insurance Jargon

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  • Actuary

    A person who compiles and analyses statistics to calculate & manage insurance risks and premiums.

  • Agent

    An insurance company representative who sells and services life insurance contracts for the insurer; he/ she is an intermediary between the insurer and the policyholder.

  • Annuity

    An insurance contract that provides income for a specified period of time, such as a number of years or for life.

  • Assignment

    Assignment is the transfer of rights in an insurance policy from one person to another. It is a means whereby the beneficial interest, right and title under a life insurance policy gets transferred from assignor (Policyholder) to assignee.

  • Master Policyholder

    Policyholder in case of group policies.

  • Maturity Claim

    The Payment to the policy holder at the end of the stipulated term of the policy is called maturity claim.

  • Money Back Plans

    In a money back plan, the insured person gets a percentage of the sum assured at regular intervals, instead of getting the lump sum amount at the end of the term.

  • Moral Hazard

    Moral Hazard is said to exist in the case where we notice the absence of a genuine need for the life insurance or when the proposal for insurance is submitted by an individual beyond his means.

  • Morbidity

    The probability of sickness or disability of a life or group of lives.

  • Mortality

    The probability of death of a life or a group of lives.

  • Mortgage

    A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan. The lender's security interest is recorded in the register of title documents to make it public information. This information is voided when the loan is repaid in full. Virtually any legally owned property can be mortgaged, although real property (land and buildings) are the most common.

  • Joint Life

    An insurance contract where two people are insured under one policy.

  • Bancassurance

    It refers to the sale of insurance products through Bank’s distribution channels.

  • Beneficiary

    The beneficiary is the person or entity, named in the policy as the recipient of the life insurance benefit in the event of policyholder's death.

  • Claim

    An insurance claim is a formal request by the beneficiary or nominee or the legal heir of a life insurance policy to an insurance company asking for the payment based on terms of the policy. The insurance company reviews the claim for its validity and then pays out to the insured or requesting party (on behalf of the insured) once approved.

  • Date of Commencement

    The date at which the policy begins, following the acceptance of risk by the insurer.

  • Date of Maturity

    The last date on which the insurance policy is valid.

  • Death Benefit

    The amount payable to the beneficiary on the death of the life assured.

  • Endowment Plan

    A plan in which the amount is paid to a policyholder if he/she outlives the tenure of contract or to the beneficiary if the insured person dies before the date on which the policy matures.

  • Exclusion

    A condition under which the benefits are not paid is referred to as exclusion. This is to avoid any misunderstanding of the terms of the policy.

  • Grace Period

    A period of time after the premium due date in which a policyholder is able to make a premium payment without the insurance policy coverage lapsing. It is a specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection cover of the policy normally continues.

  • Freelook Period

    Freelook period gives an individual the option to review the terms and conditions of the policy for 15 days from the date of receipt of the policy document. If he/ she disagrees with the terms and conditions stated in the policy, he/she has the option to return it, stating the reasons for objection. In such a case, the policy would be cancelled and the premium paid would be refunded to him / her by the insurance company, after deducting the expenses incurred on medical examination, stamp duty charges and other charges. For policies sold through distance marketing, the freelook period is 30 days.

  • Insurability

    The characteristic of being acceptable for insurance is called insurability. The insurability of an individual or object is ascertained depending upon the norms and policies of the insurance company. The sum of all conditions and circumstances pertaining to the insurance applicant, such as health, life expectancy, risk profile, and susceptibility to injury are judged according to the insurance company's requirements or standards to find out if the individual is insurable.

  • Insurance

    Insurance is to indemnify the insured, or beneficiary on the death of the insured, as protection against unforeseen circumstances.

  • IRDAI

    The acronym for Insurance Regulatory and Development Authority of India. It is an apex body overseeing the insurance business in India. It protects the interest of the policyholder, regulates, promotes, and ensures orderly growth of the insurance industry in India.

  • Whole Life Insurance

    A life insurance policy where benefits are payable to the beneficiary on the death of insured, whenever that occurs. The premium payment can happen for a specified number of years or throughout life.

  • Vesting Age

    The age at which the insured starts receiving a pension from the insurance company in an insurance-cum-pension policy.

  • Underwriter

    Underwriters accept or reject risks on behalf of the insurance company. The underwriter reviews the applications and decides whether to offer insurance to the applicants (that is, whether to accept or reject the risk).

  • Underwriting

    Underwriting is a term used by life insurers to describe the process of assessing risk. Underwriting of a risk involves consideration of material facts on the basis of which a decision will be taken whether to accept the risk and if so at what rate of premium.

  • Unit Linked

    A type of long-term savings plan where premiums are used to buy units in an investment fund such as a unit trust. The assets in the fund can be a mix of stocks, shares, bonds, property and other securities. The value of the units and the return from them can fluctuate in line with the investment performance of the assets in the fund and there is no guarantee on the amount of capital that will be returned.

  • Term Insurance

    Term insurance plan is a form of life cover, it provides coverage for a defined period of time, and if the insured expires during the term of the policy then a death benefit is payable to nominee.

  • Top Up

    Top-up is the additional amount over and above the premium that the policyholder can invest to gain from the performing market. This can be done only under unit linked policies, provided the feature is available with the policy.

  • Single Premium

    A lump sum contribution towards the life insurance policy

  • Stamp Duty

    It is the tax levied while buying shares and other assets such as a house or life insurance policy.

  • Sum Assured

    Sum Assured is the amount that an insurer agrees to pay on the occurrence of a stated contingency.

  • Surrender

    The act of cancelling an insurance contract before it becomes payable or reaches its maturity date for a surrender value.

  • Surrender Value

    Surrender value is the amount payable to the policyholder on surrendering his right under a policy and terminating the contract of insurance.

  • Survival Benefit

    Survival benefits are benefits given to the policy holder during or upon completion of the policy tenure. In the case of money back policies, a certain pre-determined amount is paid to the insured after regular intervals. Survival benefit applies only in a case where the insured is alive.

  • Riders

    Riders are add-on options available to the policyholder that provides additional benefits.

  • Paid Up Policy

    It is an insurance policy that requires no further premium payments but continues to provide coverage as per the paid up value calculated.

  • Participating Policies

    These are also called as “par policies” or “policies with participation in profits”. A participating life insurance policy is a policy that receives bonus payments from the life insurance company.

  • Policyholder

    The person who owns the insurance policy.

  • Policy Document

    A document issued to the policyholder by the insurer stating the terms and conditions, product information and benefits, premium schedule etc.

  • Policy Term

    The period for which insurance cover is available.

  • Premium

    The amount paid by the insured, either in lump sum or in periodic amounts, to the insurance company under the life insurance policy.

  • Premium Payment Term

    Period for which one is committed to pay towards one’s insurance cover.

  • Proposal Form

    The application form that needs to be completed for securing an insurance policy.

  • Nominee

    Nominee is the person selected by the policyholder to receive the benefit in case of death of the life insured. It thus gives a valid discharge to the insurer on settlement of claim under a life insurance policy.

  • Keyman Insurance

    Also known as Key Person Insurance. The cover is designed to protect or compensate a business in the event of the death or incapacity of an important employee regarded as crucial to that organisation.

  • Lapse

    A policy which has been terminated for non-payment of premiums. A policy lapses usually when the premium due is not paid even after the grace period.

  • Life Assured

    Life assured is the person whose life is insured by the life insurance company.

  • Life Cover

    Amount payable on death of the life insured.

  • Life Insurance

    Life Insurance is the contract between a policyholder and the insurer, where the insurer promises to pay the nominee / beneficiary a sum of money upon death of the insured.

  • Loyalty Additions

    Incentives given by an insurer as an additional benefit to the insured for keeping the policy in full force throughout the term of the contract. Rates are determined by the insurer on the basis of its performance.

  • Lump Sum Benefit

    A benefit arising in the form of a single, once - and - for - all payment rather than a series of payments.