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Accident
A sudden and unintentional happening leading to a loss. In the context of life insurance, it is a sudden and unforeseen happening that causes disability or death of the policyholder.

Accidental Death Benefit
An add–on benefit in which the benefit is payable in the event of death of the life insured as a result of an accident provided he has opted for this benefit.

Accumulation Period
The time interval between the commencement of the policy and the time when benefits are paid out. It is established by the insured.

Actuarial Cost Method
A method that determines contributions that would be made under an insurance plan.

Actuary
A professional with expertise in technical aspects of insurance. An actuary is a statistician and mathematician by training.

Age Limits
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.

Agent
An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.

Annuitant
The person who will receive annuity benefits at stipulated intervals of time like yearly / half yearly/ quarterly/ monthly intervals.

Annuity
The amount paid under an annuity scheme at stipulated intervals like yearly/half yearly/quarterly/monthly intervals.

Annuity Certain
An insurance contract that provides an annuity for a certain number of years, irrespective of whether the insured is alive or dead.

Annuity Consideration
The payment that an annuitant makes for an annuity.

Annuity Plans
These plans provide for a “pension” (or a mix of a lump sum amount and a pension) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lump sum amount is provided for the next of kin.

Asset allocation
How your investments are spread across various asset classes

Assignee
The person to whom the benefits of a life policy are assigned.

Assignment
A transfer of the rights and benefits of an insurance policy from one person to another.

Assignor
Assignor is the person who holds the right/title under the policy and who can make a valid assignment.

Authority
The Insurance Regulatory and Development authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999.

Beneficiary
The person who receives the benefit of a policy in case of death during the term or the policyholder who receives the benefit on maturity.

Benefit Period
The time for which an insurance company covers the designated insured or dependents for the benefits.

Binding Receipt
A temporary receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the binding receipt.

Bonus
Bonus is the amount added to the basic sum assured under a with-profit life insurance policy.

Branch Office System
This is a type of life insurance marketing system under which the company opens branch offices in various areas. Here the Salaried Branch Managers, who are employees of the company, are responsible for hiring and training new agents.

Claim
A request for payment of the contractual benefits by the insurer that is made by the insured or the beneficiary.

Claim Amount
It is the amount payable by the insurer to the insured, or the assignee/beneficiary under a policy on a claim arising.

Concealment
When an applicant withholds critical information from the insurance company, it is called concealment. For instance, if the applicant is suffering from a terminal disease and he does not notify the company of this, he is concealing information.

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.

Cover
Another word for insurance; it also refers to the amount of insurance.

Coverage
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.

Critical illness rider
A rider that provides a policyholder financial protection in the event of a critical.

Dating Back
Dating Back or Back Dating is an option that allows the assured to get the benefits of lower age by commencing the policy from a date earlier than the date on which the proposal form was signed. Back Dating is permissible only within the same financial year.

Days Of Grace
Policy holders are expected to apy premium on due dates. A period of 15-30 days is allowed as grace to make payment of premium; such a period is called days of grace.

Death Benefit
The benefit received by the beneficiary(ies) on the death of the insured.

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.

Deferred annuity
An annuity plan where the first annuity payment becomes payable after a chosen period that exceeds one year.

Deposit Premium
The premium deposit paid by a policyholder when an application is made for an insurance policy and is applied toward the actual premium when asked to pay.

Deposit Term Insurance
This is a form of term insurance, not really involving a "deposit," but one in which the first-year premium is more than subsequent premiums.

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 the time of loss.

Double/Triple Cover Plans
These offers 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 maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.

Embezzlement
Fraudulent use or taking of another's property or money which has been entrusted to one's care.

Endowment Plan
A plan in which the amount is paid to a policyholder if he outlives the tenure of the contract or to the beneficiary if the insured person dies before the date on which the policy matures.

EPDB
Extended Permanent Disability Benefit.

Exclusions
Risks and circumstances not covered by a policy. No claim will be entertained in case of losses arising out of such situations.

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.

First Unpaid Premium (FUP)
First unpaid premium refers to the first default in paying premium by the policy holder. On payment of the due premium a receipt is issued and this receipt indicates the date of next due. If this due premium is not paid that date becomes the date of FUP.

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.

Free look period
A free look period gives the client an option to review the terms and conditions of the policy within 15 days from the date of receipt of the policy document. Where he disagrees with the terms and conditions stated in the policy, he has the option to return the policy, stating the reasons for objection. In such a case the Policy would then be cancelled and the premium paid by the client would be refunded to him, after deducting
proportionate risk premium for the period on cover, expenses incurred by the Insurance Company on medical examination of the client and stamp duty charges.

Group Life Insurance
Life insurance of a group of people under a policy. This group should already be in existence and should not have come together only for the purpose of insurance.

Guaranteed additions
The amount paid as returns in assured-return insurance plans. Guaranteed additions are expressed as a percentage of the sum assured, with the amount payable being stated by the insurer at the outset. The present value of the family's share of the breadwinner's future earnings is considered as Human Life Value, for purposes of life insurance.

Immediate Annuity
An annuity providing for payment to being immediately.

Insurability
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.

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.

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.

IRDA
The acronym for the Insurance Regulatory and Development Authority of India, it is the apex body overseeing the insurance business in India. It protects the interests of the policyholders, regulates, promotes and ensures orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

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 lump sum amount to the legal heirs.

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.

Lapse
The termination of an insurance policy due to non-payment of premia.

Last Birth Day (l.b.d)
Age at last birthday.

Level Premium Life Insurance
Life insurance for which the premium remains unchanged year after year.

Level term cover rider
A rider that increases the life cover in non-term plans, up to a maximum of the sum assured on the base policy. The rider offers death benefit along, and serves the need for extra protection for a specified time period.

Life Insurance
A contract provided for the payment of a sum of money to the person assured or failing him, to the person entitled to receive the same, on the happening of certain event for the consideration. Here, sum of money refers to sum assured/benefits; certain event refers to contingent event; consideration refers to premium.

Loyalty additions
Additional benefits (other than guaranteed additions/bonus) paid to policyholders on maturity of certain investment-based insurance plans for staying on through its term. Loyalty additions are paid as a percentage of the sum assured, with the amount depending on the insurer's financial performance.

Managing agent
An agreement with the company by which a person, firm or company is entitled to the management of the whole affairs of a company under the control and direction of the directors unless provided for in the agreement, and includes any person, firm or company occupying such position by whatever name called.

Maturity Claim
The request for payment made by the policyholder at the end of the chosen term of the policy is known as Maturity Claim.

Maturity Date
The date on which the policy term expires.

Misrepresentation
The act of misrepresenting any terms, benefits or payments of a policy, deliberately misleading any interested public. It is the 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 in fact reflect its true nature.

Money Back Plan
A plan in which part of the sum assured is paid back to the policyholder at regular intervals.

Moral Hazard
Moral Hazard is said to exist in the case where there is an apparent absence of a genuine need for a life insurance or when a proposal for insurance is submitted by an individual beyond his means. It also indicates increase in probability of loss that results from dishonesty in the character of the insured person. Thus it is the dishonest tendencies on the part of the insured person that may induce that person to attempt to defraud the insurance company.

Paid-up Insurance
Insurance policy on which all required premiums have been paid.

Paramedical Examination
Physical examination of an applicant by a trained person other than a physician.

Participating policies
These are also called "par policies" or "policies with participation in profits". These policies are not non-par policies and are entitled for any share in surplus (profits) during the term of the policy.

Policy
This is the legal hardcopy document that has the conditions of the insurance contract, formally issued by the insurer in the name of the insured. This document has to be produced to the insurer during the term of the policy in case of any changes, claims etc. made in relation with the policy.

Policy Period
The period during which a Policy contract offers insurance.

Policy year
Period between a Policies anniversary dates.

Policyholder
The person who owns the policy, in this case, a life insurance policy.

Policyholder's funds
Monies set aside by insurers to cover outstanding liabilities to policyholders. Also known as technical reserves.

Policyholder's surplus
Amount over and above liabilities available for an insurer to meet future obligations to its policyholders.

Policyholder's surplus ratio
The difference between an insurers' asset and its liabilities divided by its liabilities. This is one measure of an insurer's financial strength.

Premium
The amount paid by a policyholder to the insurance company, in order to be covered under a policy.

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 death occurs during the policy term.

Premium Notice
Notice of a premium due, sent out by the company or one of its agencies to an insured. It is also referred to as "Renewal Notice".

Premium Waiver Benefit (PWB)
Premium waiver benefits are the benefits which can be availed under children's policies, wherein the future premiums payable upto vesting date are waived in the event of death of the proposer before the vesting date.

Prospect
A potential new customer who can be approached for buying an insurance policy.

Reduced Paid-up Insurance
A form of insurance available as a non-forfeiture option. It provides for continuation of the original insurance plan, but at a reduced amount.

Reinstatement
To restore the policy after the insurance policy has lapsed.

Reinsurance
The transfer of part or whole of the risk by the original insurance company to one or more reinsures.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured go up and apparent risk increases.

Rider
An add-on benefit available at the option of the policyholders that may alter certain features of a policy by increasing or restricting benefits.

Social sector
In accordance with the Insurance Act, 1938, this includes unorganised sector, informal sector, economically vulnerable or backward classes and other categories of persons, both in rural and urban areas.

Sum assured
The amount of cover taken under a life insurance policy, it is the minimum amount that will be paid on death of the policyholder during the policy term.

Surrender value
The amount payable by the insurer to the owner of an investment-based plan in case he opts to terminate the policy after three years (the mandatory lock-in period) but before its maturity date. The surrender value will be the premia paid till date minus surrender charges and any outstanding loans due.

Survival benefits
The amount payable to a policyholder under an investment-based plan if he survives the policy term. Typically, it is the sum assured plus returns (guaranteed additions / bonus) accrued.

Target Pension
This is the amount of pension which one wishes to receive under a pension policy.

Term
Term is the period for which insurance coverage is given.

Term Cover
A type of life insurance where the sum assured is payable only in the event of death of the insurer during the specified term. In the case of survival, the contract expires and the premium is not paid back to the insured.

Term Insurance Rider
An endorsement or attachment to a life insurance policy that provides additional term coverage for only a specified, limited period. If the insured dies during this time, the designated beneficiary(ies) can receive death benefit proceeds.

Term Life Insurance
A form of life insurance which provides coverage for a specified period of time and does not build cash value.

Underwriting
The process of evaluating risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

Unearned Premium
The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.

Uninsurable Risk
That which is not acceptable for insurance due to excessive risk.

Vesting Bonus
It is the Bonus, which the insurer declares after evaluating its assets and liabilities, and that is added to the sum assured under a policy.

Vesting Date
This is the date from which the life assured, i.e. child becomes the absolute owner of the policy.

Void Contract
A contract obtained by fraud is a void contract. It is not a contract at all. Under this there cannot be any action as no rights or obligations are cast on the parties to the contract.

Voidable Contract
A contract, which is valid until it is treated as void by the aggrieved party, is a voidable contract. Usually in such an event, the insurer would be the aggrieved party and has the option to repudiate liability.

Waiver of premium rider
A rider that waives the premia payable on the base policy and other riders in certain circumstances mostly related to death, disability or injury. An important feature especially for investment products such as children's policies.

Whole Life Insurance
A life insurance policy where benefits are payable to a beneficiary on death of the insured, whenever that occurs. The premium payment can happen for a specified number of years or throughout life.

Whole-life plans
Class of life insurance policies that provide cover through your lifetime.

Without-profit policy
An insurance plan in which the policyholder does not get any share of the insurer's profits.