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Accident
A sudden and unintentional happening leading
to a loss. In the context of life insurance,
it is a sudden and unforeseen happening
that causes disability or death of the policyholder.
Accidental Death Benefit
An add-on benefit in which the benefit is
payable in the event of death of the life
insured as a result of an accident provided
he has opted for this benefit.
Accumulation Period
The time interval between the commencement
of the policy and the time when benefits
are paid out. It is established by the insured.
Actuary
A professional with expertise in technical
aspects of insurance. An actuary is a statistician
and mathematician by training.
Actuarial Cost Method
A method that determines contributions
that would be made under an insurance plan.
Agent (Life Advisor)
A representative of an insurance company
authorized to sell insurance policies.
Age Limits
The maximum and minimum ages above or below
which an insurance company will not accept
applications for insurance from or will
not renew a policy with a person.
Annuitant
The person who will receive annuity benefits
at stipulated intervals of time like yearly
/ half yearly/ quarterly / monthly intervals.
Annuity
The amount paid under an annuity scheme
at stipulated intervals like yearly/half
yearly/quarterly/monthly intervals.
Annuity Certain
An insurance contract that provides an annuity
for a certain number of years, irrespective
of whether the insured is alive or dead.
Annuity Consideration
The payment that an annuitant makes for
an annuity.
Assignee
The person to whom the benefits of the life
insurance policy are assigned.
Assignment
A transfer of the rights and benefits of
an insurance policy from one person to another.
Authority
The Insurance Regulatory and Development
authority established under sub-section
(1) of section 3 of the Insurance Regulatory
and Development Authority Act, 1999.
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Beneficiary
The person who receives the benefit of a
policy in case of death during the term
or the policyholder who receives the benefit
on maturity.
Benefit Period
The time for which an insurance company
covers the designated insured or dependents
for the benefits.
Bonus
Bonus is the amount added to the basic sum
assured under a with-profit life insurance
policy.
Buying price
This is the price at which you enter a fund,
based on the market value per unit, increased
by the relevant trading costs associated
with buying the assets.
During the term of the plan, your financial
requirements could change. And you may want
switch between funds. Your units in the fund
would be sold at the selling price and other
units bought at the buying price as per your
instructions.
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Claim
A request for payment of the contractual
benefits by the insurer that is made by
the insured or the beneficiary.
Concealment
When an applicant withholds critical information
from the insurance company, it is called
concealment. For instance, if the applicant
is suffering from a terminal disease and
he does not notify the company of this,
he is concealing information.
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Dating Back
Dating Back or Back Dating is an option
that allows the assured to get the benefits
of lower age by commencing the policy from
a date earlier than the date on which the
proposal form was signed. Back Dating is
permissible only within the same financial
year.
Death Benefit
The benefit received by the beneficiary
(ies) on the death of the insured.
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Endowment Plan
A plan in which the amount is paid
to a policyholder if he outlives the tenure
of the contract or to the beneficiary if
the insured person dies before the date
on which the policy matures.
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Free look period
A free look period gives the client an option
to review the terms and conditions of the
policy within 15 days from the date of receipt
of the policy document. Where he disagrees
with the terms and conditions stated in
the policy, he has the option to return
the policy, stating the reasons for objection.
In such a case the Policy would then be
cancelled and the premium paid by the client
would be refunded to him, after deducting:
proportionate risk premium for the period
on cover, expenses incurred by the Insurance
Company on medical examination of the client
and stamp duty charges.
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Group Life Insurance
Life insurance of a group of people
under a policy. This group should already
be in existence and should not have come
together only for the purpose of insurance.
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Human Life Value
The present value of the family's
share of the breadwinner's future earnings
is considered as Human Life Value, for purposes
of life insurance.
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IRDA
The acronym for the Insurance Regulatory
and Development Authority of India, it is
the apex body overseeing the insurance business
in India. It protects the interests of the
policyholders, regulates, promotes and ensures
orderly growth of the insurance industry
and for matters connected therewith or incidental
thereto.
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Lapse
The termination of an insurance policy due
to non-payment of premia.
Last Birth Day (l.b.d)
Age at last birthday.
Level Premium Life
Insurance
Life insurance for which the premium remains
unchanged year after year.
License
Permission granted by IRDA to the applicant
for commencement and operation of the insurance
business in India.
Life Insurance
A contract provided for the payment of a
sum of money to the person assured or failing
him, to the person entitled to receive the
same, on the happening of certain event
for the consideration. Here, sum of money
refers to sum assured/benefits; certain
event refers to contingent event; consideration
refers to premium.
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Managing agent
An agreement with the company by which a
person, firm or company is entitled to the
management of the whole affairs of a company
under the control and direction of the directors
unless provided for in the agreement, and
includes any person, firm or company occupying
such position by whatever name called.
Maturity Date
The date on which the policy term expires.
Money Back Plan
A plan in which part of the sum assured
is paid back to the policyholder at regular
intervals.
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Nomination
A provision by which a policyholder can
designate any person to receive the policy
money in the event of his death.
Nominee
A person selected by the policyholder to
receive the benefit in case of death of
the life insured.
Non Forfeiture Option
A clause whereby the insurers do not generally
forfeit all the premia paid, in case of
a lapse of policy. This benefit is accorded
to policy holders because of higher premia
paid during the early years and the interest
earned on these premia by the insurance
companies.
Non Participating policies
These are also called "non-par policies"
or"policies without participation in
profits". These policies are not entitled
for any share in surplus (profits) during
the term of the policy
Non-Standard Life
An individual who cannot be granted a policy
under normal rates of premia.
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Participating policiesThese are
also called "par policies" or
"policies with participation in profits".
These policies are not non-par policies
and are entitled for any share in surplus
(profits) during the term of the policy.
Policyholder
The person who owns the policy, in this
case, a life insurance policy.
Premium
The amount paid by a policyholder to the
insurance company, in order to be covered
under a policy.
Prospect
A potential new customer who can be approached
for buying an insurance policy.
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Reinstatement
To restore the policy after the insurance
policy has lapsed.
Reinsurance
The transfer of part or whole of the risk
by the original insurance company to one
or more reinsurers.
Rider
An add-on benefit available at the option
of the policyholders that may alter certain
features of a policy by increasing or restricting
benefits.
Rural sector
In accordance with the Insurance Act, 1938, any place under the latest
census, which has
1) A population of not more than five thousand
2) A density of population of not more than four thousand per square
kilometre and
3) At least 75 per cent of the male working population is engaged in
agriculture.
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Selling price
This is the
price at which you can sell units, based
on the market value per unit, less the relevant
trading costs associated with selling the
assets.
Social sector
In accordance with the Insurance Act, 1938,
this includes unorganised sector, informal
sector, economically vulnerable or backward
classes and other categories of persons,
both in rural and urban areas.
Surrender Value
A value payable if you want to surrender
the plan before a claim arises.
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Term
The tenure of the policy.
Term Cover
A type of life insurance where the sum assured
is payable only in the event of death of
the insurer during the specified term. In
the case of survival, the contract expires
and the premium is not paid back to the
insured.
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Whole Life Insurance
A life insurance policy where benefits
are payable to a beneficiary on death of
the insured, whenever that occurs. The premium
payment can happen for a specified number
of years or throughout life.
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