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Most Commonly Used Life Insurance Terms

Life insurance is a financial tool that secures your family's financial security and overall well-being when you are not around. It also helps you plan for important financial goals like milestone planning and retirement planning. Rightly so, it is becoming an integral part of one's financial planning.

Having a detailed understanding of Life Insurance is critical, to ensure you choose solutions that best serve your financial needs. Having said that, most people get overwhelmed with the large number of technical terms and insurance-related jargon used in insurance policy contracts. To simplify this for you, here is a glossary of the most commonly used life insurance terms.

  • Policyholder – A Policyholder is the person in whose name the life insurance policy is issued.
  • Proposer –A proposer is a person who proposes to purchase the policy, either to insure himself or another person (usually a family member), and who is liable to pay the premiums of the policy.
  • Life Assured– Life Assured is the person for whom the life insurance is bought to cover the risk of untimely death. In many cases, the Life Assured is also the Policyholder and the Proposer.
  • Sum Assured - Sum Assured is the predetermined amount, that the insurer agrees to pay when a specified event occurs, as per the terms of the insurance policy.
  • Nominee:  A Nominee is the person (usually a legal heir) who will receive the admissible benefits under the policy in the event of death of the life assured.
  • Premium - Premium is the amount one pays to keep the life insurance plan active and to enjoy continued coverage. Timely and regular payment of premium is advised to keep the policy active at all times and provide protection in case of untoward incidents. Premium may be paid monthly, quarterly, half yearly or annually to the insurance provider.
  • Policy Term - Policy Term means the period for which an insurance policy provides coverage.
  • Maturity Date - Maturity Date is the day when the policy term ends, and the insurance company fulfils its commitment towards the insured by giving them the maturity benefit, if any.
  • Death benefit - The benefit (amount) that the nominee is eligible to receive, as per the terms and conditions of the insurance policy, upon the death of the Life Assured.
  • Survival benefit – It is a benefit/s that a policyholder receives during the term of the policy as per the terms and conditions of the policy.
  • Maturity benefit - Maturity benefit is the amount paid at the end of the policy term. The Maturity Amount is generally used by the policyholder to fulfil planned financial goals like child’s education, marriage, maintaining retirement corpus etc.
  • Riders – Riders are optional add-ons to an existing life insurance policy to enhance one’s financial protection. They are over and above the benefits of the base policy. They can be benefits like 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.
  • Free Look Period: An insurance policy comes with a Free Look Period which is the duration within which the policyholder can cancel the policy if he/she disagrees with the terms and conditions as stipulated in the policy document. Typically, most life insurance policies offer a free look period of 15 days after receiving the policy document. However, this may differ from policy to policy.
  • Claim: If the life assured passes away during the policy tenure, the nominee needs to raise a Claim with the insurance company to receive the death benefit as mentioned in the policy.

A thorough understanding of the above terms is advised to ensure you make a well-informed decision for your and your family’s well-being and financial security.

Disclaimer: Please note that the above explanation of key terms has been simplified for your understanding. For legal definitions of these terms please refer to the policy document or product brochure. In the event of conflict, if any, between the terms and conditions contained above and those contained in the Policy document, the terms and conditions contained in the Policy document of the individual product shall prevail.

For a detailed understanding of the above-mentioned Life Insurance terms, please click here https://www.reliancenipponlife.com/contact-us and enter your details.

Our expert financial advisor will get in touch with you soon after.

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Visit Us: https://www.reliancenipponlife.com/

 

Mktg/Blog_LifeInsuranceTerminology/V1/May2022

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