Common life insurance terms which you should know
Aman decided to purchase a life insurance policy for his family. However, when he met the insurance agent, he was puzzled and unable to comprehend the technical terms the agent used. . So he decided to purchase insurance later as he was confused. Have you ever been in Aman’s situation? Do you put off buying insurance coverage because the terms are difficult to understand? Then this is the blog for you. We’ve compiled a glossary of terms commonly used in life insurance.
Policyholder is an individual who purchases a life insurance policy. Insurers expect the policyholders to pay the premium amount against the insurance.
Premium is a specific amount you have to pay periodically to avail of the insurance coverage. Policyholders can pay the premium monthly, quarterly, half-yearly or annually depending upon the plan purchased. The policyholder need to pay the sum depending on their health, age, and type of employment.
Policy Tenure is the duration for which the life insurance policy is valid and provides coverage.
The policyholder designate a particular person as nominee, who will receive the benefits of the life insurance policy in case of an unfortunate event. Spouses, parents or kids can be appointed as nominees so that it will help them financially after the death of the policyholder. We also call nominees as beneficiary.
Riders are add-ons to your existing policy which provides many additional benefits.
Insurance company give a dedicated time, called grace period to the policyholder if he fails to make the premium payment before the due date.
The insurers terminate the policies when the policyholder does not pay the premium amount even after the grace period. These policies are considered either terminated or lapsed due to non-payment of premium.
If the policyholder wishes to reactivate a lapsed policy, he can reactivate it within a specific time frame known as the revival period.
If a policyholder does not agree with the terms and conditions of the insurance policy he purchased, he has the option to cancel it within a certain time frame known as the free-look period. The premiums for the coverage that have already been paid will be returned.
The insurance companies assure a set sum to the nominee when the policyholders passes away. We call this “Sum Assured”
If the policyholder dies, the insurers pay the amount to the nominee instead. We call this “Death Benefit”. They are completely different in spite of sounding similar. Though it sounds similar to sum assured, they are completely different. The death benefit will include rider benefits and will usually be higher than the sum assured.
Wait! There is one more term which you need to know to ensure that your policies are safe and secure.
e-Insurance is a one-time account that you create to link all your policies under one platform, regardless of where you have taken it and the nature of the policy. It is a safe digital vault for your insurance documents and you can access them anytime, anywhere.
While you have invested your time, energy and money to secure your family with the right insurance policy, take the next important step of digitizing them.
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