Insurance
is a promise of compensation for specific
potential future loss in exchange for a periodic payment. Insurance is
designed to protect the financial well-being of an individual, company
or other entity in the case of
unexpected loss.
We
all know about insurance but many times we ignore some basic features
of insurance policy.
Here
we will try to explain some of the words which your agent normally use
while explaining any insurance policy.
By
explaining the below terms we want to make you familiar with your
insurance policy.
Sum
assured (also known as Cover) - This refers to the amount paid out on a
policy if you die within the Term of insurance plan. In case of an
endowment policy Sum Assured can be paid out on maturity along with the
bonus and in case of Money back policies a part of Sum Assured is paid
out on regular intervals and on maturity along with the bonus.on
regular intervals. Endowment policy It is the guaranteed amount to be
paid out at maturity with or without Bonus (Depend upon the policy).
Premium
- The owner usually pays a fixed premium amount in exchange for the
insurance company's guarantee to cover any economic losses incurred
under the scope of the agreement of insurance.
Bonus
- It is the amount added to the basic sum assured under a with-profit
life insurance policy.
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 premium paid till date minus
surrender charges and any outstanding loans due.
Endowment
Policy
- In this plan the amount is paid to a policyholder if he lives
survives the term even after the tenure of the insurance contract or to
the beneficiary if the insured person dies before the date on which the
policy matures.
Term
Insurance - Term life insurance is a life
insurance plan in which person can get the huge insurance coverage with
fewer lower premium. In this plan beneficiary will get the cover amount
only if the insured person dies within the policy term. Unlike
Endowment policy policyholder don't get any amount if insured person
lives even after the policy expires. One should have atleast one Term
Insurance policy. One can consult a financial planner for the best
possible insurance solution.
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.
ULIP
- It is
an abbreviation for Unit Linked Insurance Policy. A ULIP is a life
insurance policy which provides a combination of risk cover and
investment. Some part of the amount invested in ULIP is used to provide
the insurance cover and the remaining is invested in equity and debt
investments and denoted as units.
Money Back Plan - A plan in which part of the
sum assured is paid
back to the policyholder at regular intervals and a part of sum assured
is paid at maturity along with bonuses.
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.
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.
