List of 15 Frequently Used Terms In Life Insurance Plans
Table of Contents
Life insurance plans, also known as life assurance, are a way to protect your family’s financial future. Life insurance can help cover the cost of long-term care or provide financial assistance during sudden, unexpected losses.
One of the most common uses for life insurance is to provide a financial buffer for your family in case of an untimely death. The second purpose of life insurance is to provide short-term financial support to your family during a time of need.
List of Common Terms Associated With Life Insurance Plans
When you are up for purchasing a life insurance plan, you’ll notice several new terminologies being used by the officials. Here’s a list of terms along with their meanings to help you.
- Policyholder: You become the policyholder when you buy an insurance policy and start paying the premium for the same.
- Beneficiary: The people you select for getting the benefits of your policy after your demise are your beneficiaries. They can be anyone from your family, friends, or relatives.
- Insurer: The bank or company which will be providing you a cover or an insurance plan is the insurer.
- Coverage: Coverage is often regarded as sum assured. It is the amount of financial aid that will be provided to the beneficiaries in case of accidental/natural death of the policyholder.
- Premium: Premium refers to the amount of money that you pay on a timely basis to the insurer. Premium adds up to your coverage and provides you the all-around protection.
- Death Benefit: Death benefit in simple terms is the coverage that you receive after your death. It can sometimes be higher than your original coverage if you have some added benefits.
- Claim: If the insured person has died, then the beneficiaries have to register for a claim process to get the coverage in return.
- Maturation of policy: The completion of your policy duration/tenure after which you receive your benefits.
- Rider: Any additional benefits on a policy are called riders.
- Paid-up Value: If you are not able to pay the premium amounts then, the insurer can arrange smaller divisions of premium for you that can be payable. These values are referred to as paid-up values.
- Grace Duration: In case you haven’t paid your premiums on time then, you get a grace period (a period of a certain number of days) to pay the premium before your policy lapse.
- Exclusion: Exclusions refer to the things that won’t be covered under a life insurance policy. One should properly read the exclusion part while buying a life insurance plan.
- Revival Period: The revival period is the time duration in which you can restore a lapsed policy after the grace period.
- Lapsed Policy: When you don’t pay the premium you get a grace period to do so. But, if you don’t pay your premium during the same your policy may lapse. It is called a lapsed policy.
- Tax Benefit: Like every other citizen of the nation you’ll have to pay a certain fixed amount of tax for your policy. However, you can get benefits from this process through different methods.
Conclusion
Buying a life insurance plan can be a tough process. However, if you are acquainted with the common terms associated with the same then, you can feel lighter during the whole documentation process.
Also read: Can I Get Guaranteed Returns On Life Insurance Plans?
