Glossary

A

• Adverse decision Any outcome other than acceptance on standard terms: a decline, a postponement or a loading.
• Advertisement Any communication that promotes an insurer or its products, and which requires the insurer's prior approval.
• Annuity A contract that converts a lump sum into an income, paid for life or for a set period.
• Appointee An adult named to receive a claim payment on behalf of a nominee who is a minor.
• Assignment Transferring the rights under a policy to another person or institution.

B

• Basis of contract The principle that the answers you give form the foundation of the policy.
• Bima Bharosa The regulator's online portal for registering complaints against insurers.
• Build Height and weight, usually expressed as body mass index, and a standard underwriting input.

C

• Claim A request for the insurer to pay what the policy promises.
• Claim repudiation An insurer's refusal to pay a claim, with reasons given.
• Commission The payment an insurer makes to an intermediary for placing and servicing business.
• Corporate agent A company, firm or bank registered to distribute insurance, as distinct from an individual agent.

D

• Death benefit The amount payable to the nominee if the life assured dies during the policy term.
• Death claim A claim made on the death of the life assured during the policy term.
• Decline A refusal to offer cover.
• Deferred annuity An annuity where payments begin at a chosen future date rather than immediately.

E

• Endowment policy Life cover combined with a contractual payout at maturity, whether or not a claim is made.
• Exclusion A circumstance in which the policy will not pay.

F

• Family history Health conditions among close relatives, which insurers ask about because some risks run in families.
• FATCA and CRS Tax-reporting declarations required where an applicant has a foreign tax connection.
• Free-look period A window after receiving the policy document in which you can return it and cancel.
• Fund value The current worth of the units held under a unit-linked policy.

G

• Good health declaration A signed statement of health that replaces a questionnaire on simplified products.
• Grace period A window after a missed premium during which the policy remains in force.
• Grievance redressal The defined route for complaining, and for escalating when a complaint is not resolved.

H

• Human life value A method of sizing cover by valuing future earnings in today's money.

I

• Income multiple cap The limit on cover relative to income, which is why insurers ask what you earn.
• Income proof Documents evidencing what you earn, required once cover or premium passes a threshold.
• Insurable interest A recognised financial stake in the continued life of the person being insured.
• Insurance agent An individual appointed by an insurer to solicit and service its insurance business.
• Insurance broker An intermediary that represents the customer and can place business with multiple insurers.
• Insurance Ombudsman An independent forum that decides policyholder complaints, free of charge.
• IRDAI The Insurance Regulatory and Development Authority of India, the sector's regulator.

L

• Lapse What happens to a policy when premiums stop being paid and the grace period expires.
• Life assured The person whose life is covered. A claim arises on their death.
• Loading An increase to the standard premium, reflecting a risk the insurer has assessed as higher.
• Lock-in period The five years during which a unit-linked policy allows no withdrawal or surrender.
• Longevity risk The risk of outliving your savings.

M

• Material non-disclosure Failing to reveal something that would have affected the insurer's decision.
• Maturity benefit The amount payable if you survive to the end of the policy term.
• Maturity claim A claim made when a policy reaches the end of its term and a maturity amount falls due.
• Medical examination Tests an insurer arranges before issuing cover, where the case calls for it.
• Micro-insurance Small, fixed, low-cost cover designed for low-income households, with simplified underwriting.
• Modal premium The amount payable each time, at the chosen payment frequency.

N

• NAV Net asset value — the per-unit price of a fund, published regularly.
• Needs analysis Sizing cover from what a family would actually have to deal with, rather than from earnings alone.
• Nominee The person you name to receive the payout on a death claim.
• Non-medical limit The most cover an insurer will issue on a declaration alone, without a medical examination.
• NRI A Non-Resident Indian — an Indian citizen residing outside India.

P

• Paid-up value A reduced sum assured that continues after premiums stop, once enough have been paid.
• PIO and OCI Person of Indian Origin, and Overseas Citizen of India — statuses for people of Indian descent abroad.
• Policy document The contract itself. The only document that states what you have actually bought.
• Policy term How long the cover lasts. Distinct from how long you pay for it.
• Policyholder The person who owns the policy and pays the premiums.
• Postponement A deferral of the decision, usually pending recovery or further information.
• Premium The amount you pay the insurer for cover, at the frequency the policy sets.
• Premium frequency How often premiums are paid — yearly, half-yearly, quarterly or monthly.
• Premium payment term How long you pay premiums for. Often the same as the policy term, but not always.
• Principal officer The person responsible for a corporate agent's or broker's regulatory compliance.
• Proposal form The application document. Its answers form the basis of the contract.

R

• Repatriation Moving money out of India — relevant to how a non-resident's premiums are paid and claims received.
• Revival Restoring a lapsed policy to full force, within a defined period and on the insurer's terms.
• Rider An optional add-on to a policy, bought for an extra premium above the base cover.

S

• Section 41 The provision prohibiting rebates offered to induce someone to take out a policy.
• Section 45 The provision limiting how long an insurer may question a life policy.
• Solicitation The act of approaching a person to buy insurance — the activity intermediaries are licensed for.
• Standard terms Cover offered at the insurer's normal price, with no loading or exclusion added.
• Sum assured The amount the insurer pays on a valid claim. The headline cover figure a policy is described by.
• Surrender value What the insurer pays if you end a policy early, before maturity.
• Survival benefit A payment made at defined points during the term, provided the life assured is alive.
• Switching Moving money between funds within a unit-linked policy.

T

• Term insurance Pure life cover for a fixed period. Pays out if you die during the term, and pays nothing if you outlive it.
• Tobacco status Whether you use tobacco in any form, and the single largest lifestyle factor in pricing.

U

• ULIP A unit-linked insurance plan. Part of the premium buys cover, the rest is invested in funds you choose.
• Underwriter The person who assesses an application and decides the terms on which cover is offered.
• Underwriting The insurer's assessment of the risk you present, which decides the terms and the price.
• Unit A share in a fund under a unit-linked policy.
• Utmost good faith The duty on both sides to disclose everything material, honestly.

V

• Vesting The date a deferred pension converts from accumulation into income.

A word on definitions

These describe how terms are generally used in Indian life insurance. Where a definition here differs from the one in your own policy document, the policy document governs — it is the contract, and this is a reference.

Nothing here is advice. It is what the words mean, so that you can read your own documents and ask better questions of whoever is selling to you.

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