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Glossary
Glossary’ section is an alphabetical listing of special insurance terms, which will give you an in-depth
explanation of the terms. These terminologies are supported with accompanying definitions, meanings and interpretation in various contexts. This section will help you to have a handle on various insurance terms.
Scroll down for a complete list of insurance terms.
Click on the respective 'Alphabet' below to have its meaning or definition displayed.
- A
- B
- C
- D
- E
- F
- G
- H
- I
- J
- K
- L
- M
- N
- O
- P
- Q
- R
- S
- T
- U
- V
- W
Special Insurance terms with Alphabet “A”
Accident:
An unforeseen and unintended event or occurrence causing damage/injury to an entity.
Accident Benefit:
Provides for payment of an additional benefit equal to the sum assured in installments on permanent total disability and waiver of subsequent premiums payable under the policy.
Age Limits:
Stipulated minimum and maximum age limit stated by the company. Based on the age limit, the company will accept/reject applications or renew policies.
Agent:
An insurance company representative licensed by the state that solicits, negotiates or effects contracts of insurance, and provides service to the policyholder on behalf of the insurer.
Annuity Plans:
These plans provide for a ‘pension’ (or a mix of a lumpsum amount and a pension) to be paid to the policyholder or his spouse. In the event of the death of both the spouses during the policy period, a lumpsum amount is provided to the next of kin.
Application Form:
Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
Assignment:
Assignment means legal transference. It is a means whereby the beneficial interest, right and title under a policy gets transferred from Assignor to Assignee. ‘Assignor’ is the policyholder who transfers the title and ‘Assignee’ is the person who derives the title from the Assignor.
Annuitant:
The person receiving annuity benefits at fixed intervals of time. (Which is on a yearly / half yearly/ quarterly or monthly basis).
An unforeseen and unintended event or occurrence causing damage/injury to an entity.
Accident Benefit:
Provides for payment of an additional benefit equal to the sum assured in installments on permanent total disability and waiver of subsequent premiums payable under the policy.
Age Limits:
Stipulated minimum and maximum age limit stated by the company. Based on the age limit, the company will accept/reject applications or renew policies.
Agent:
An insurance company representative licensed by the state that solicits, negotiates or effects contracts of insurance, and provides service to the policyholder on behalf of the insurer.
Annuity Plans:
These plans provide for a ‘pension’ (or a mix of a lumpsum amount and a pension) to be paid to the policyholder or his spouse. In the event of the death of both the spouses during the policy period, a lumpsum amount is provided to the next of kin.
Application Form:
Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
Assignment:
Assignment means legal transference. It is a means whereby the beneficial interest, right and title under a policy gets transferred from Assignor to Assignee. ‘Assignor’ is the policyholder who transfers the title and ‘Assignee’ is the person who derives the title from the Assignor.
Annuitant:
The person receiving annuity benefits at fixed intervals of time. (Which is on a yearly / half yearly/ quarterly or monthly basis).
Special Insurance terms with Alphabet “B”
Beneficiary:
The person(s) or entity (ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.
Business Insurance:
A policy, which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled
The person(s) or entity (ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.
Business Insurance:
A policy, which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled
Special Insurance terms with Alphabet “C”
Cancelable:
A contract of health insurance that may be cancelled during the policy term by the insurer or insured.
Coinsurance:
1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required.
2) A policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured.
Convertible Whole Life Policy:
A mix of ‘whole life policy’ and ‘endowment policy’, it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibility of converting the policy to an ‘endowment’ policy after five years of commencement.
Coverage:
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Cooling off period:
The 15-day period during which a new policyholder can cancel an insurance/assurance policy. This is referred to in the cancellation notice, which is sent to people entering into long-term policies. The 15-day period starts from receipt of the cancellation notice.
A contract of health insurance that may be cancelled during the policy term by the insurer or insured.
Coinsurance:
1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required.
2) A policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured.
Convertible Whole Life Policy:
A mix of ‘whole life policy’ and ‘endowment policy’, it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibility of converting the policy to an ‘endowment’ policy after five years of commencement.
Coverage:
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Cooling off period:
The 15-day period during which a new policyholder can cancel an insurance/assurance policy. This is referred to in the cancellation notice, which is sent to people entering into long-term policies. The 15-day period starts from receipt of the cancellation notice.
Special Insurance terms with Alphabet “D”
Deferment Period:
Period between the date of subscription to an insurance-cum-pension policy and the time at which the first installment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
Depreciation:
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Double/Triple Cover Plans:
These offer to the beneficiaries’ double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of the maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.
Deferred annuity:
An annuity contract that is purchased either with a single tax-deferred premium or with periodic tax-deferred premiums over time. Payments begin at a predetermined point in time, such as retirement.
Period between the date of subscription to an insurance-cum-pension policy and the time at which the first installment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
Depreciation:
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Double/Triple Cover Plans:
These offer to the beneficiaries’ double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of the maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.
Deferred annuity:
An annuity contract that is purchased either with a single tax-deferred premium or with periodic tax-deferred premiums over time. Payments begin at a predetermined point in time, such as retirement.
Special Insurance terms with Alphabet “E”
Embezzlement:
Fraudulent use or taking of another's property or money which has been entrusted to one's care.
Endowment Policy:
The assured has to pay an annual premium, which is determined on the basis of the insured's age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.
Excess And Surplus Insurance:
1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy.
(2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. Exclusions: Specific conditions or circumstances for which the policy will not provide benefits.
Fraudulent use or taking of another's property or money which has been entrusted to one's care.
Endowment Policy:
The assured has to pay an annual premium, which is determined on the basis of the insured's age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.
Excess And Surplus Insurance:
1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy.
(2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. Exclusions: Specific conditions or circumstances for which the policy will not provide benefits.
Special Insurance terms with Alphabet “F”
Facultative Reinsurance:
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Family Insurance:
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Fiduciary:
A person who holds something in trust for another.
Fire Insurance:
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government.
Franchise Insurance:
A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.
Force Majeure:
In the event where the Corporation’s performance or any other obligations are prevented or hindered as a consequence of any act of God or state, strike, lockout, legislation or restriction by any government or any other statutory authority or any other circumstances that lie beyond the Corporation’s anticipation or control, the performance of this policy shall be wholly or partially suspended during the continuance of such force majeure. The Corporation shall resume its obligations towards the Policy as soon as the Force Majeure event ceases. The Corporation undertakes to keep the IRDA Informed and seek prior approval before effecting any of these changes.
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Family Insurance:
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Fiduciary:
A person who holds something in trust for another.
Fire Insurance:
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government.
Franchise Insurance:
A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.
Force Majeure:
In the event where the Corporation’s performance or any other obligations are prevented or hindered as a consequence of any act of God or state, strike, lockout, legislation or restriction by any government or any other statutory authority or any other circumstances that lie beyond the Corporation’s anticipation or control, the performance of this policy shall be wholly or partially suspended during the continuance of such force majeure. The Corporation shall resume its obligations towards the Policy as soon as the Force Majeure event ceases. The Corporation undertakes to keep the IRDA Informed and seek prior approval before effecting any of these changes.
Special Insurance terms with Alphabet “G”
Grace Period:
Policy holders are expected to pay premium on due dates. A period is 15-30 days is allowed as grace to make payment of premium; such period is referred to days of grace.
Guaranteed Insurance Sum (GIS):
A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.
Gross Insurance Value Element (GIVE):
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annuity of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after deferment period.
Group Life Insurance:
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Guaranteed Policies:
These are policies where the payment stays fixed.
Guarantee period:
Period during which the level of interest specified under a fixed annuity is guaranteed.
Guaranteed death benefit:
Basic death benefits guaranteed under variable annuity contracts.
Policy holders are expected to pay premium on due dates. A period is 15-30 days is allowed as grace to make payment of premium; such period is referred to days of grace.
Guaranteed Insurance Sum (GIS):
A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.
Gross Insurance Value Element (GIVE):
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annuity of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after deferment period.
Group Life Insurance:
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Guaranteed Policies:
These are policies where the payment stays fixed.
Guarantee period:
Period during which the level of interest specified under a fixed annuity is guaranteed.
Guaranteed death benefit:
Basic death benefits guaranteed under variable annuity contracts.
Special Insurance terms with Alphabet “H”
Homeowners’ insurance policy:
The typical homeowners insurance policy covers the house, the garage and other structures on the property, as well as personal possessions inside the house such as furniture, appliances and clothing, against a wide variety of perils including windstorms, fire and theft. The extent of the perils covered depends on the type of policy. An all-risk policy offers the broadest coverage. This covers all perils except those specifically excluded in the policy.
The typical homeowners insurance policy covers the house, the garage and other structures on the property, as well as personal possessions inside the house such as furniture, appliances and clothing, against a wide variety of perils including windstorms, fire and theft. The extent of the perils covered depends on the type of policy. An all-risk policy offers the broadest coverage. This covers all perils except those specifically excluded in the policy.
Special Insurance terms with Alphabet “I”
Indemnity:
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
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.
Insurability:
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy of an individual's risk profile.
Insurance:
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Insured:
The person whose life is covered by a policy of insurance.
Insurance pool:
A group of insurance companies that pool assets, enabling them to provide an amount of insurance substantially more than can be provided by individual companies to ensure large risks such as nuclear power stations. Pools may be formed voluntarily or mandated by the state to cover risks that can’t obtain coverage in the voluntary market such as coastal properties subject to hurricanes.
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
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.
Insurability:
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy of an individual's risk profile.
Insurance:
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Insured:
The person whose life is covered by a policy of insurance.
Insurance pool:
A group of insurance companies that pool assets, enabling them to provide an amount of insurance substantially more than can be provided by individual companies to ensure large risks such as nuclear power stations. Pools may be formed voluntarily or mandated by the state to cover risks that can’t obtain coverage in the voluntary market such as coastal properties subject to hurricanes.
Special Insurance terms with Alphabet “J”
Joint Life Endowment Assurance Plans:
The sum assured (plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.
The sum assured (plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.
Special Insurance terms with Alphabet “K”
Keyman Insurance Policy:
A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.
A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.
Special Insurance terms with Alphabet “L”
Lapsed Policy:
A policy, which has terminated and is no longer in force due to non-payment of the premium due.
Limited Payment Life Policy:
Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policyholder occurs. Again, this policy can also be of the ‘with profits’ or ‘without profits’ type.
Loyalty Additions:
The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LIC’s effort to further share its surplus after valuation with the policyholders, as LIC is a non-profit organization.
Life Assured:
The person whose life is insured by an individual life policy is called life assured.
Liability insurance:
Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.
A policy, which has terminated and is no longer in force due to non-payment of the premium due.
Limited Payment Life Policy:
Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policyholder occurs. Again, this policy can also be of the ‘with profits’ or ‘without profits’ type.
Loyalty Additions:
The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LIC’s effort to further share its surplus after valuation with the policyholders, as LIC is a non-profit organization.
Life Assured:
The person whose life is insured by an individual life policy is called life assured.
Liability insurance:
Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.
Special Insurance terms with Alphabet “M”
Maturity:
The date upon which the face amount of a life insurance policy, if not previously invoked due to the contingency covered (death), is paid to the policyholder.
Maturity Claim:
The Payment to the policyholder at the end of the stipulated term of the policy is called maturity claim.
Misrepresentation:
Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not reflect its true nature.
Money Back Policy:
Unlike endowment plans, in money back policies, the policyholder gets periodic ‘survival payments’ during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid. These types of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policyholder.
Moral Hazard:
Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured person. Moral hazard is the risk factors that affect the decision of the insurance company to accept the risk.
The date upon which the face amount of a life insurance policy, if not previously invoked due to the contingency covered (death), is paid to the policyholder.
Maturity Claim:
The Payment to the policyholder at the end of the stipulated term of the policy is called maturity claim.
Misrepresentation:
Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not reflect its true nature.
Money Back Policy:
Unlike endowment plans, in money back policies, the policyholder gets periodic ‘survival payments’ during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid. These types of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policyholder.
Moral Hazard:
Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured person. Moral hazard is the risk factors that affect the decision of the insurance company to accept the risk.
Special Insurance terms with Alphabet “N”
Nomination:
An act by which the policyholders authorises another person to receive the policy proceeds. The authorised person is called Nominee.
Non-cancelable policies:
Such policies stay in effect regardless of whatever that might happen and as long as the premium is paid from time to time.
An act by which the policyholders authorises another person to receive the policy proceeds. The authorised person is called Nominee.
Non-cancelable policies:
Such policies stay in effect regardless of whatever that might happen and as long as the premium is paid from time to time.
Special Insurance terms with Alphabet “O”
Premium:
The payment, or one of the regular periodic payments, that a policyholder makes to an insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death).
Premium Back Term Insurance Plans:
These provide for refund of all the premiums paid, in the event of the life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event of death occurrence during the policy term.
The payment, or one of the regular periodic payments, that a policyholder makes to an insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death).
Premium Back Term Insurance Plans:
These provide for refund of all the premiums paid, in the event of the life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event of death occurrence during the policy term.
Special Insurance terms with Alphabet “P”
Qualification Period:
That period of time, as stated in an insurance policy, during which benefits are not payable to the insured following a claim. This period is to enable the insurance company to confirm that the claim is genuine and is usual in health insurance
That period of time, as stated in an insurance policy, during which benefits are not payable to the insured following a claim. This period is to enable the insurance company to confirm that the claim is genuine and is usual in health insurance
Special Insurance terms with Alphabet “Q”
Qualification Period:
That period of time, as stated in an insurance policy, during which benefits are not payable to the insured following a claim. This period is to enable the insurance company to confirm that the claim is genuine and is usual in health insurance
That period of time, as stated in an insurance policy, during which benefits are not payable to the insured following a claim. This period is to enable the insurance company to confirm that the claim is genuine and is usual in health insurance
Special Insurance terms with Alphabet “R”
Reinstatement:
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the end of the grace period. The company may require evidence of insurability (and if health status has changed reinstatement is denied) and will always require payment of the total amount of past due premiums.
Risk:
The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability and the protection against catastrophic loss is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency i.e. although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as ‘underwriting’.
Reinsurance:
Insurance bought by insurers. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer's capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid.
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the end of the grace period. The company may require evidence of insurability (and if health status has changed reinstatement is denied) and will always require payment of the total amount of past due premiums.
Risk:
The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability and the protection against catastrophic loss is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency i.e. although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as ‘underwriting’.
Reinsurance:
Insurance bought by insurers. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer's capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid.
Special Insurance terms with Alphabet “S”
Salary Saving Scheme:
This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.
Sub Standard Risk:
Person who is considered as an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Surrender Value:
The value payable to the policyholder in the event of his decision to terminate the policy before the maturity of the policy.
Survival Benefit:
The payment of sum assured to the incurred person, which has become due by installments under a money back policy.
This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.
Sub Standard Risk:
Person who is considered as an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Surrender Value:
The value payable to the policyholder in the event of his decision to terminate the policy before the maturity of the policy.
Survival Benefit:
The payment of sum assured to the incurred person, which has become due by installments under a money back policy.
Special Insurance terms with Alphabet “T”
Term insurance:
A form of life insurance that covers the insured person for a certain period of time, the ‘term’ selected by the policyholder. It pays benefit to a designated beneficiary only when the insured dies within that specified period which can be 1, 5, 10 or even 20 years. Term life policies are renewable but premiums increase with age.
Travel insurance:
Insurance to cover problems associated with traveling, generally including trip cancellation due to illness, lost luggage and other incidents.
A form of life insurance that covers the insured person for a certain period of time, the ‘term’ selected by the policyholder. It pays benefit to a designated beneficiary only when the insured dies within that specified period which can be 1, 5, 10 or even 20 years. Term life policies are renewable but premiums increase with age.
Travel insurance:
Insurance to cover problems associated with traveling, generally including trip cancellation due to illness, lost luggage and other incidents.
Special Insurance terms with Alphabet “U”
Underwriting:
Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.
Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.
Special Insurance terms with Alphabet “V”
Vesting Age:
The age at which the receipt of pension starts in an insurance-cum-pension plan.
The age at which the receipt of pension starts in an insurance-cum-pension plan.
Special Insurance terms with Alphabet “W”
Whole Life Policy:
Premiums are paid throughout the lifetime of life assured. This can be ‘with profits’ or ‘without profits’ (A ‘with profit’ policy is eligible for various bonuses declared by LIC every year, while a ‘without profits’ policy does not have this privilege)
With-Profit policy:
Policies entitled to bonus, which is paid at the time of claim-death or maturity one with-profit policies.
Without-Profit policy:
These policies are not entitled to participate in bonus announced by the insurer.
Premiums are paid throughout the lifetime of life assured. This can be ‘with profits’ or ‘without profits’ (A ‘with profit’ policy is eligible for various bonuses declared by LIC every year, while a ‘without profits’ policy does not have this privilege)
With-Profit policy:
Policies entitled to bonus, which is paid at the time of claim-death or maturity one with-profit policies.
Without-Profit policy:
These policies are not entitled to participate in bonus announced by the insurer.