Life Insurance Glossary

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Assignment

Assignment means legal transference. A method by which the policy holder can transfer his interest to another person. An assignment can be made by an endorsement on the policy document or as a separate deed.

Beneficiary

The person or party the owner of a life insurance policy names to receive the policy benefit.

Claim

Written request by an insured for the insurance company to cover an incurred loss. An insurance contract is a promise to pay certain sums under certain conditions. Making a claim is invoking that promise and if it is in accordance with what is set out in the contract then it is admissible and can be payable if all other terms and conditions of the contract are met.

Date Of Commencement

The date on which cover begins, following acceptance of the risk by the insurer.

Free Look Period

Within 15 days of the receipt of this Policy, the Policyholder may, if dissatisfied with it for any reason, give the Company a written notice of cancellation along with reason for the same, and return the Policy Document to the Company, subject to which the Company shall send the Policyholder a refund comprising the first Regular Premium paid less the proportionate risk premium for the period the Life Assured was on cover and the expenses incurred on medical examination and stamp duty charges.

Grace Period

This provision offers the policy holder additional period of time after the due date, during which the premium can be paid. The risk continues to be covered during this period and claims will be serviced in case of death during this period.

Insurable Interest

A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.

Lapse

Termination of a life insurance contract because of non-payment of premiums. If there are non forfeiture values, the policy lapses but may remain effective reduced paid-up insurance.

Life Assured

Life Assured is the individual on whose life the policy is taken.

Maturity Date

The date on which an endowment insurance policy's face amount will be paid to the policy-owner if the life insured is still living.

Mortality

The probability of death of a life or group of lives.

Material Facts

Facts that may have a bearing on the decision by the insurer to give or not to give insurance in a particular case, and what premium to charge.

Nominations

An act by which the policy holders authorizes another person to receive the policy moneys. The person so authorized is called Nominee.

Premium

This is the payment that a policyholder makes to a life insurance company to get insurance cover. He or she has a responsibility to ensure that the correct amount states is paid as and when it falls due as stated in the policy document.

Proposer

The person who proposed to Insurance Company for taking Insurance Policy for other person's name.

Reinstatement /Revival

This refers to the process where the policy that has terminated for example due to a lapse of non-payment of premium and the owner has applied for the policy to be reinstated and the company has agreed to do so on certain conditions.

Renewal Premium

Premiums that are payable after the initial/First premium and that are a condition for the continuation of the policy.

Riders

Additional or supplementary benefits that are bought together with a main life policy on the same life. In short, Additional covers that can be added to a life policy, for a cost. Riders could be added, amended or deleted from the main policy, any time, subject to risk assessment. Details and the terms and conditions of the benefits are clearly indicated in the main policy document.

Sum Assured /Risk Cover

The lump sum benefit payable under an insurance policy or contract in circumstances defined within the policy (usually it represents an amount payable on death).

Survival Benefit

The payment of sum assured to the insured person which has become due by installments under a money back policy.

Surrender Value

The surrender or cash value is the amount payable to the policyholder should the policyholder decide to discontinue the policy. However, the insurance protection provided under the policy will also cease. In other words, the amount payable by the insurance company if you foreclose a policy after the premium is paid for a minimum period as stipulated.

Almost Good Faith

The principle of almost good faith requires the applicant to disclose all material facts.

Vesting Age

This is the age when the rights under the policy vests with the name individual. In other words, the age at which life assured becomes absolute owner of the policy, which in the case of minors is 18 years.