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 used by the agent. . 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.
An individual who purchases a life insurance policy is known as a policyholder. They are expected to pay the premium amount against the insurance.
Premium is a specific amount you have to pay periodically to avail of the insurance coverage. The premiums can be paid monthly, quarterly, half-yearly or annually depending upon the plan purchased. The sum to be paid depends upon the individual’s health, age, and type of employment.
Policy Tenure is the duration for which the life insurance policy is valid and provides coverage.
A nominee is a person designated by the policyholder, 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. A nominee is also known as a beneficiary.
Riders are add-ons to your existing policy which provides many additional benefits.
The grace period is the time given by the insurance company to the policyholder if he fails to make the premium payment before the due date.
When the policyholder does not pay the premium amount even after the grace period, the policy gets 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 sum assured is the amount guaranteed to the nominee if the policyholder passes away.
If the policyholder dies, the amount which will be paid to the nominee is known as a death benefit. 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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