10 Life Insurance Terminologies You Must Know About

Choosing to purchase life insurance is the first step toward safeguarding your family's financial condition as well as future objectives and goals in the event of a tragic incident. The next phase entails a careful examination of the features, terms, and conditions of numerous life insurance policies to determine which one is most suited to your needs. So, continue reading to learn about some key terminologies to be aware of when purchasing a life insurance policy.

10 Life Insurance Terminologies You Must Know About

Here are some terms that you will frequently encounter while researching various life insurance plans.

1. Policyholder - The phrase refers to the person who purchases and pays the life insurance policy's premium. Furthermore, a policyholder is simply the plan's owner, and the life assured may or may not be the policyholder.

2. Life Assured - The life assured is the person who benefits from an insurance plan's life cover and protection. It must be noted that the terms, policyholder and life assured, are different from each other. Assume a parent purchases life insurance for his child. In this scenario, the father is the policyholder, and the child is the life assured.

3. Sum Assured - The sum assured is the amount set by the policyholder at the start of the policy to be paid to his/her loved ones in the event of an unexpected incident. It can be calculated after a thorough examination of the individual's family's specific circumstances as well as their long-term goals.

4. Nominee/Beneficiary - The nominee or beneficiary is the individual who receives the sum assured and additional benefits following the death of the life assured during the policy period. A beneficiary can be a wife, kid, parent, or anybody else who is financially dependent on the life assured.

5. Premium - The premium is the amount paid to the insurer to keep the contract active and continue to get coverage. The amount is determined by several factors, including the age of the life assured, his/her living habits, the type of policy chosen, the sum assured, and the policy's tenure.

6. Rider - Riders are the extra benefits that come with a standard life insurance policy. They can be bought at the start of the insurance or on anniversaries. Critical illness coverage, accidental death benefit rider, premium waiver, and other rider options are available from all insurers.

7. Free Look Period - The free look period refers to the time frame during which a purchased policy can be returned. If the policyholder is unhappy with the policy terms and conditions, he/she can return the paperwork between 15-30 days of purchase.

8. Surrender Value - It is the amount paid by the insurer if the policyholder wants to cancel his/her life insurance policy. The value is determined by the terms and regulations of the insurance. Furthermore, it must be noted that some policies do not provide any surrender value at all.

9. Policy Exclusions - Death by suicide, childbirth, adventurous sports like paragliding, sky diving, bungee jumping etc., or death during a war or a terrorist attack are examples of policy exclusions in which the insurer does not pay death benefits to the beneficiary after the life assured's death. 

10. Underwriters - After a thorough risk assessment, the underwriters authorise the policy's issue. They're also in charge of processing the beneficiary's claim after the life assured passes away.

Endnotes 

These are the ten keywords you should know while choosing the best life insurance coverage for you and your family. You can even consult an insurance agent or a financial counsellor to make a rational financial decision.

You may also like to read - What Type Of Life Insurance Is Suitable For Unmarried People?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.