Common Terms Used For Term Insurance Policies

  A

* Accidental death benefit : This is a rider or an additional benefit you can add on top of your term insurance policy. If you die because of an accident during the policy tenure, then the insurance company will pay your family an additional sum of money, which is the accidental death benefit. This is apart from the sum assured for the term insurance.

  B

* Beneficiary : Beneficiary is the person or the persons of your family, such as your spouse, children and/or parents, who will receive the sum assured for your term insurance if you die during the policy tenure.

* Benefits : It is the lump sum amount the insurance company will pay your family if you die during the policy tenure.

  C

* Coverage : It is the total sum assured for the term insurance you have bought. The insurance company has to pay the total amount to your family in case you die during the policy tenure.

* Claimant : It is the member or members of your family, named in your term insurance policy, who can claim the sum assured for your term insurance if you die during the policy tenure.

 D

* Death Benefit : It is the total sum assured that your family members will receive against your term insurance policy if you die during the policy tenure.

* Death Claim : The claim lodged by the nominee named in your term insurance, if you die during the policy tenure.

 G

* Grace Period : Grace period is the extra few days when you can still pay the premium for your term insurance after the due date is over to ensure that the policy does not lapse.

 I

* Insurance is a subject matter of solicitation : This essentially means that insurance has to be requested or asked for, and it is not sold. This is a mandate by IRDA and is found in all insurance advertisements.

 L

* Life insurance : Life insurance ensures that your family does not have to go through any financial hardship if you die early. On buying a life insurance policy, you pay a regular premium to the insurance company for a specific number of years. And if you die during the policy tenure, your family will receive the sum assured. Term insurance, endowment policy, money back policy, etc are different kinds of life insurance policies. For some policies like endowment and money back, etc, you will receive a lump sum at maturity.

* Limited Pay Insurance : Term insurance policy for which the premium amount is paid for a lesser number of years but the coverage is provided for a longer period. For example, you buy limited pay insurance that provides you coverage till you are 65, but you pay the premium till the age of 50. The premium amounts of limited pay insurance are usually higher as compared to regular pay term insurance.

 N

* Nominee : While buying a term insurance policy, you can name your spouse, children, parent, etc, as your nominee for the policy. If you die during the policy tenure, the nominee will receive the sum assured for the policy.

 P

* Policyholder : One who has bought an insurance policy.

* Policy Tenure : The stipulated period for which the insurance policy has been bought.

* Premium : One-time, monthly, quarterly, half-yearly or yearly fee you pay for the insurance policy that you have bought.

 R

* Rider :  A rider is an insurance policy provision that offers additional benefits. Like if you have bought a term insurance, you can buy an accidental death benefit rider along with it. Now if you die due to an accident, you will be paid the sum assured for the accidental death benefit rider along with the sum assured for the term policy.

 T

* Term Insurance :  A term insurance policy is a pure life cover. You pay a premium to an insurance company for a specific number of years, and in return, in case you were to meet with an untimely death, the insurance company will pay the sum assured to your family. Compared to other life insurance products, term insurance provides higher coverage for a lesser premium.