Below we have decoded some insurance terms you are likely to encounter:
Life assured: The person whose life is covered by an insurance policy is called life assured or insured; the one who pays the insurance company and gets protection for himself and his family. The insured can claim the amount in case of a contingency. However, the nominee or beneficiary can claim the insurance amount in the event of the death of the assured.
Premium: This is the monthly or the annual amount you pay to the insurance company to keep yourself protected. The more the protection cover, the more the premium. And, the riskier you are—If you live on the edge with alcohol, smoke or actions—higher the premium. Start early to enjoy a lower premium payout.
Beneficiary: That’s insurance jargon for the person or legal entity that is entitled to receive the claim amount or death benefit from a life insurance policy. The beneficiary receives such benefits on the death of the policy holder or benefactor on the maturity of the policy. The eligibility for such benefits is determined as per the policy terms and conditions or by other legal norms.
Exclusions: Insurance policies usually cover only certain items, events and eventualities, and leave others uncovered. Thus, things, circumstances or situations excluded from or not covered by an insurance policy or policies are called exclusions. Insurance companies keep the provision of exclusions to avoid losses or carve away coverage for risks they are unwilling to insure. When you buy insurance, ask specifically for exclusions.
Claim amount: We know you are invaluable, but, the insurance company needs a number to pay out in case something happens to you. Claim amount is the money which is paid by an insurance company to the assured or beneficiary or the legal heir of the insured either on the maturity of the policy or the death of the insured.
Lapsed policies: It’s like when you don’t pay your mobile bill by last date but still have the grace period before the phone company disconnects your phone. Only thing, it can hurt much more in case of an insurance policy. An insurance policy lapses or becomes dead in case there is an excessive delay in payments and servicing of the policy, and the premium has not been paid even after the grace period is over. A lapsed policy means that the risk cover will not be available to the policyholder or his dependents.
Survival benefit: Happens when you pay the premium for years, get protection for all the risks you took and live to tell the tale (it’s a good thing). Survival benefit is the benefit which the policyholder receives during or upon completion of the tenure of the policy. Survival benefit is paid only if the insured is alive. If not, the beneficiary is entitled to receive the death benefit. For instance, under money back policies, a pre-determined amount is paid to the policyholder after regular intervals, say five years or more.
Term plan: Products that for a relatively low sum of money provide a large cover. In other words, this is pure insurance with no investment or savings component. Under this plan, death benefit is paid to the beneficiary if the insured person dies during the policy term. The insured, however, is not entitled to receive any survival benefit, i.e. in simple terms, return of premium or any interest on those premium payments.
Premium payment term: That’s the total number of years for which you have to pay premium.
Policy term: Policy term is the duration for which an insurance policy provides you cover. For example, if a policy provides you cover for 15 years, then this will be the policy term.
Go online: Advantages of going online are clear—policies can be compared at one place in terms of feature and price—you can select one with maximum benefit at the right premium. You can do that either through online insurance aggregators or by directly visiting the website of the insurance company. These days, online purchases are even enabled through Aadhaar, thereby making verification and other processes faster and more secure.