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Life insurance has become a necessity in today’s world. It is probably the best way in which you can secure your family if something happens to you. Your family members can use the proceeds from your policy to pay off your debts and liabilities or use them for their expenses. However, before you start looking at Life insurance policies, there are some life insurance terms that you need to know. We make you aware of the necessary insurance terminology that you are likely to come across in the policy document. Knowing them will help you make an informed decision.
1. Accident
An unforeseen event that can injure, harm or cause death to the policyholder
2. Age limit
This is the upper and lower limit of age, as specified by the insurance company, above or below which the company will not approve the policy.
3. Agent
Any person or agency that represents the insurance company and sells and services insurance products for the company. The agent acts as an intermediary between the insurer and the insured.
4. Beneficiary
The beneficiary is the nominee that may include a close family member, or a dependent or any person specified in the policy, who is the recipient of the death benefit in case the policyholder dies.
5. Coverage
This is one of the most important insurance terms. The life insurance coverage is the amount or the sum assured as mentioned in the policy which will be awarded to the nominee listed in the insurance policy in case of the policyholder’s death. Analyse your needs expenses and determine a suitable amount that can help secure your dependents after you.
6. Exclusions
These are explicitly mentioned in the policy document. The exclusions stipulate as to what will NOT be covered under the insurance policy. Be careful to read and understand the exclusions carefully; as they can get your insurance claim rejected.
7. Maturity date
The maturity date of the policy is the day the policy ends. On this date, the amount paid towards the life insurance policy is given back to the insured. However, only some plans offer maturity benefits. Make sure to check with your agent or the insurance company regarding the insurance plan.
8. Maturity claim
The maturity amount is the amount that is given to the policyholder after the maturity date. This includes the investment amount in case of ULIPs and can also include perks and bonuses.
9. Surrender value
The insurance company pays the policyholder a specific amount if he/she wishes to terminate the life insurance policy before the maturity date. This amount is known as the surrender value.
10. Grace period
If you fail to make the premium payment on time, the policy lapses. However, there is some time known as a grace period after the due date, in which you can pay the premiums without additional interest or risk of the policy lapsing. The grace period varies from company to company
Read the insurance policy document carefully and make sure you know and understand all the life insurance terms before purchasing the plan. In case of any doubts, you may reach out to your insurance agent or a company representative.
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