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Life Insurance Terms

Accidental Death Benefit

Under this benefit, a sum of money is paid over and above the death benefit in the event of death caused due to an accident.

Additional Riders

Add-on riders like severe sickness or accidental death coverage may incur an additional premium when choosing additional benefits.

Adverse Selection

The tendency of persons exposed a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all, as in the case of floods. Adverse selection concentrates risk instead of spreading it. The fact is that insurance works best when risk is shared among large numbers of policyholders.

Age

Age is the key criterion in determining the premium you pay. However, some saving plans are age agnostic. An individual is less prone to an age-related ailment and untimely demise at a young age; therefore, the premiums are lower.  

When you start saving at an early age, you can enrol in a solid saving plan at a discounted premium rate. As you get older, the insurer raises your premiums since the chances of filing a claim due to death rise.

Age limits

The predefined minimum and maximum ages below and above which the insuring company will not accept applications or may not renew policies.

AIDS

Acronym for Acquired Immune Deficiency Syndrome, a disease.

Allocation

It means that units are allotted to the Policyholder in the chosen Investment Fund. The allocation is done at the prevailing unit price.

Annualised Premium

Annualised premium is the sum of all the premiums required to be paid by the Policyholder during the year. For example If the monthly premium to be paid is ₹ 1,000, annualised premium would be ₹ 1,000 (monthly premium) *12(number of months) = ₹ 12,000

Annuitant

Annuitant is the person who receives certain amounts as income at yearly/ half yearly/ quarterly/ monthly intervals from an annuity contract. Usually the owner of the contract or his or her spouse.

Annuity

A scheme under which a certain amount is paid at regular yearly/ half yearly/ quarterly/ monthly intervals.

Annuity Plans

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

Assignee

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

Assignment

The tendency of persons exposed a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all, as in the case of floods. Adverse selection concentrates risk instead of spreading it. The fact is that insurance works best when risk is shared among large numbers of policyholders.

  • Conditional assignment
  • Absolute Assignment

 

---Assignment is the legal transfer of rights and interests in an Insurance Policy. It leads to a shift in the ownership of the Insurance Policy.

Assignor

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

Auto Pay Option

This option saves the Policyholder from the trouble of remembering the due date of premium as the funds are automatically transferred from his bank account/credit card to the company, as per your instructions.

Auto Surrender

Auto surrender of a policy happens when the premiums are not paid for a period greater than the period of Revival as specified by the company. For example: If the period of Revival is 2 years, then the policy would surrender automatically after 2 years from the date of unpaid premium. Policyholder will receive the Surrender Value, if any.