Insurer: Is the company that will be providing the insurance cover
Proposal form: In insurance, the person who wants to purchase insurance will have to apply for the same on a preprinted document called the proposal form.
Under writer: Is the person who will decide, whether to accept the proposal form on not. The underwriter decides on whether to accept the proposal at standard rate or additional rate or defer the proposal for some time or reject the proposal form. These decisions are based on accessing the health, age, gender, occupation, income, educational qualification and family history of the person being insured.
Age proof: There are two types of age proofs, namely, standard age proof and nonstandard age proof. Driving license, birth certificate, matric certificate, Aadhar card, passport and PAN card are standard age proofs. On the other hand, voter ID card, ration card and self-declaration are some of the nonstandard age proofs.
Residence Proof: Also known as address proof. Passport, driving license, voter ID card, latest bank statement, ration card, latest fixed line phone bill, latest electricity bill are some of the residence proofs.
Policy Document: It is a written contract between the insurance company and the policy holder. It specifies the terms and condition and all details related to the policy.
Nomination: In case of death, the company has to pay the specified amount to the nominee. The process of registering the name of such a person is called nomination.
Assignment: It is a condition where the policy holder (assignor) loses the right to claim on a specific policy. With assignment of the life insurance policy, all the rights, benefits and liabilities of the policy are transferred to the assignee.
Sum Assured: It is the amount for which the person is insured.
Premium: It is the amount that the policy holder has to pay. Premiums can be one time premium, limited premium or regular premium. The type of premium will differ from policy to policy.
F.P.R: First premium receipt is the receipt issued by the company on acceptance of the proposal.
Mode of premium: The policy holder can choose the frequency of premium, i.e. annual mode, half yearly mode, quarterly mode and monthly mode.
Premium payment term: It is the duration in years. The premium terms vary single premium to limited premium to regular premium. In single premium, only one time lump sum premium is paid. In limited premium, premiums paying years are greater than one year and less than the total term of the policy. In regular premium, the premium is paid till the last year of the policy.
Risk coverage term: It refers to the number of years till which the risk will be covered.
Contract Number: Every insurance company will issue a unique number to a policy. It is also called as policy number. It helps the insurer in record keeping and tracking the policy.
Life assured: Is the person on whose name the risk cover is taken.
Policy holder: Is the owner of the policy and pays for the premium. Policy holder and life assured can be one person or different persons. For example, Father is the policy holder and minor daughter is the life assured.
Proposer: The person who fills the proposal form and signs on it. The proposer is always the policy holder. Again, proposer can be a single person also. For example, a major earning person takes a policy on his own name.
Nominee: Is the person, who in case of death of the life assured during the risk coverage term, will get the money.
Assignee: Is the person who will get the money in case of death of the life assured during the policy period. The maturity benefits are also paid to the assignee by the insurance company.
Grace period: It is the time during which the premium has to be deposited. This time period is in addition to 365 days. Generally, the grace period is 15 or 30 days. It may vary from company to company and policy to policy within a company.
In force policy: It means that the premiums are being paid in time and that the company is liable to pay claim as per the terms mentioned in the policy document.
Lapsed policy: Due to non-payment of premium the contract ceases to exist. The company will not pay any maturity or death claim in such case.
Reinstatement: A lapsed policy can be again converted into an â€˜in force policy’, if the policy holder pays the due premiums with fine.
Death benefit: It is the amount that the nominee will get in case of death of the life assured. It is equal to the sum assured plus sum assured of any applicable rider plus vested bonus.
Maturity benefit: In case the life assured survives through the complete policy term, then the policy holder will get an amount equal to the sum assured along with all the accrued bonuses. Some policies even give loyalty bonus.
Survival benefit: Also known as money back, it is a percentage of sum assured paid to the policy holder after regular intervals of time.
Date of risk commencement: It is the date from which the risk cover of an accepted proposal form starts. In case of any eventuality after the date of risk commencement, the nominee is entitled to all the death claim benefits. It does not matter whether the policy holder has received the hard copy of policy document or not.
Date of maturity: It is the date when the term of the policy expires. After the date of maturity, all death claim benefits cease to exist and the policy holder is paid the agreed sum assured along with vested bonus.
Participation in profits: The policies participating in profits will get bonus. This bonus is a percentage of the surplus generated by the policy in a given year. There a different kinds of bonus, namely, Simple reversionary bonus, Compound reversionary bonus, Guaranteed bonus, Non-guaranteed bonus and Cash bonus.
Vested bonus: All bonuses which have been declared get added to the sum assured. All bonuses once declared can neither be reduced nor can be retained by the company. The sum of all such declared bonuses is called the vested bonus.
Guaranteed cash surrender value: In case the premiums have been paid for three or more years, the policy can be surrendered. The minimum amount guaranteed is equal to 30% of annual premium paid less first year premium along with the entire vested bonus.
Cash surrender value: It is the value which is calculated by the insurance company keeping in view the performance of that policy. The customer is paid guaranteed cash surrender value or cash surrender value, whichever is higher.
Non forfeiture provision: States that if a policy has been in force for a minimum of three full years and subsequent due premiums are not paid, then the policy will have proportionately reduced sum assured along with vested bonus. Such policy will not participate in profits from the last un-paid premium date.
Reduced paid up sum assured: The reduced sum assured is calculated as follows; it is the number of instalments paid divided by the total number of premium installments multiplied by the sum assured.
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