Life Insurance is a kind of insurance in which a sum assured will be provided to the family of the policyholder after his or her unfortunate death. Hence, to secure the life of your loved ones the life insurance policy is best to be purchased. One can choose the life insurance policy according to their need and the premiums they can pay. But before going with the life insurance policies some of the basic life insurance terminologies are there which one need to clear early understand. So, here we are going to discuss all the terms related to the life insurance policy. Hence, one could easily understand all the related aspects of the life insurance policy.
Terms Related To The Life Insurance Policy
Policy Holder
The first person of the life insurance policy who is being insured under the scheme and he or she is the person who is going to pay all the premiums for a specific scheme. One can purchase a life insurance policy early in life to get many benefits along with the fewer pay premiums.
Life insured
He or she is the person who is holding the policy and is being insured under the plan. The amount of the sum assured will be provided to the nominee selected by the policyholder.
But it is not like that the person who is purchasing the policy is being insured as a husband can buy a life insurance policy for his housewife, in that case, the husband is going to pay the premiums.
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Sum assured
It is that amount of money that is going to be paid by the insurer after the death of the policyholder when the policy is in active mode. The amount to be paid to the nominee is decided before when the policy starts and hence based on that the premiums would be paid by the policyholder.
Under any unfortunate condition when the policyholder dies and assured amount will be provided to the nominee for financial assistance. Therefore, it is a very good way to check the initial future of your family when you are no more with them.
Nominee
The person who is getting the sum assured after the death of the insured person is known as the nominee of the policy. The name of the nominee will be decided by the policyholder when he or she purchases the policy. The amount will only be given to the nominee when it is claimed after the death of the policyholder.
Policy Tenure
It is the duration of the period for which the policy is providing the coverage. For example, if the person had a policy in the year 2019 and the term is for 40 years than the coverage will be provided to the individual till 2059. The period of the policy to be active in mode is 1 to 70 years or a hundred years. The period will be decided in the starting when the policyholder is purchasing the policy. There are many options to cover the risk for the whole life in the insurance too.
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Maturity Age
This is the term which specifies that when the insurance will get maturity. For example, if a person has a policy in the year 2020 and the term of the policy is 20 years than the maturity age for that specific policy will be 2040.
Premium
It is the total amount that is to be paid by the policyholder to get the advantages for his or her family after his or her death. The amount provided as the premium is always different because the policy would be different for one policyholder and the other depending upon the age and type of premium they can pay.
Premium Payment Mode
It is the mode of the duration of payment in which you are going to pay the premium. That is there is an option for the policyholder that he or she wants to pay the premium on a quarterly or monthly basis, on 10 years or 20 years basis or one time. The premium payment mode will be decided by the policyholder based on their income and the capacity of paying the premium.
Riders
These are the extra benefits that can be included in your policy which will increase the premium rate along with the sum assured to be given. Hospital cash, any serious illness or many other diseases can be added to the policy in the starting. Hence, riders can provide you with more benefits for your family.
Death Benefits
Sometimes people confuse the death benefits with sum assured. Yes, both are almost similar but the only difference is that in death benefits along with the sum assured the extra benefits will also be provided to the nominee at the time of claim after the unfortunate death of the policyholder.
Maturity Benefits
It is also known as the survival benefit. These are the one which is provided to the nominee for their survival after the age of their maturity tenure in the policy. An assured amount will be provided to the policyholder for survival after the age of maturity of the policy. In the case of term insurance, no such benefits will be provided this is only for simple life insurance plans.
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Free-look Period
In this is the policyholder will be provided with a time of 10 days generally to decide whether he or she wants to keep the policy or wants to return it. Many times it happens that after purchasing the policy the policyholder will not get satisfied by the benefits provided and hence free look period gives them a chance to return the policy within that period.
Grace Period
It is the time given to the policyholder if in any unfortunate case he or she becomes unable to pay the premiums on time. The Grace period will depend upon the type of policy you are holding along with the premium payment mode that how much time you will get to pay the premiums. But if even after that the person is unable to pay the premiums then the policy will get lapsed.
Surrender Value
Not all the insurer is providing the surrender value but some are offering it to the policyholder. This is an amount given to the policyholder if in any case he or she decides to discontinue the policy before the maturity age comes.
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Paid-up Value
In any case, if the policyholder discontinues the insurance policy then the amount will be provided with a reduced sum assured depending upon the premiums paid by the policyholder.
Revival Period
Even when the policy gets lapsed due to non-paid premiums over the grace period then some of the insurance policy provides a chance to the policyholder to pay the premiums in the Revival period. This is the period in which the lapsed policy can be activated after paying the premiums on time given.
Underwriters
The professionals who do the evaluation of the risk of being involved in the policy of the policyholder get started. At the time of the claim by the nominee, the policy needs to be getting approved by the underwriters after that only the claim value will be provided to the nominee.
Tax Benefits
One can save the tax up to the investment of 1.5 lakhs under 80C and at maturity under the act 10 D. Hence, in this case, one will be able to get the benefits of claiming the amount without paying any tax for the sum assured.
Exclusions
These are some of the conditions which are being applied by the insurance policy. These need to check the unread by the policyholder at the starting of the purchase to eliminate any hassle for the nominee while claiming. The exclusions mention all the related terms and conditions for the policy along with the case where no claim will be provided. Hence, design an important part that has to be read by the policyholder properly.
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Claim Process
It is the process that has to be followed after the death of the policyholder, unfortunately. The process has to be followed by the nominee given by the policyholder who is going to get the benefits on behalf of the policyholder.
Hence, all the above given are the life insurance terminologies that can be used during the whole process of purchasing the policy till claiming. One has to go through all the terms to know about life Insurance properly. Hence, still, you have any doubt regarding the insurance policy then you can comment below. Our experts will try to reach you and will answer your queries properly and precisely.
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