Absolute Liability
Absolute liability describes a case where liability attaches to a person even if his/ her fault or negligence cannot be ascertained.
Accident
An unanticipated event or incident that causes bodily injury or damage to the vehicle.
Accident Policy (Personal Accident Policy)
A policy that covers expenses incurred arising for treating injuries caused due to an accident.
Accidental Death Benefit
The benefits offered to the nominee by the insurer when the insured dies due to an accident.
Actuary
A person having expertise in the fields of economics, mathematics, and statistics, who helps an insurance business in analyzing risk, and estimation of premiums, etc. for an insurance policy.
Agent
It refers to an individual or organization as appointed by an insurance company for selling insurance products, providing services to the customers on behalf of the insurance company.
Annuitant
The person who is liable to receive the annuity/retirement benefits.
Annuity
It is a fixed sum of money paid to the annuitant on a periodic basis, usually for the rest of their life or for a specified term.
Arbitration
It refers to an alternate dispute resolution procedure rather than going to a court.
Assets
It includes property of an insurance company available to pay claims to the policyholders.
Assignee
The person to whom the insurance policy, its rights and benefits are legally assigned or transferred.
Assignment
It refers to the transfer when made by the policyholder of its benefits or proceeds, as a security amount for a loan. In case of demise of the policyholder, the benefits are first paid to the assignee and the remaining (if any) is then paid to the policyholder's beneficiary.
Bancassurance
It refers to the selling of insurance products and services by banking institutions.
Beneficiary
A beneficiary is a person nominated in a life insurance policy to receive benefits in case the policyholder dies.
Benefits
It includes an amount that the insurer/insurance company offers to the beneficiary/nominee under a life insurance policy.
Bonus
It is an extra sum that gets accumulated under an insurance policy annually and which will be paid to the policyholder at maturity of the policy or to the nominee in the event of the death of the policyholder (as applicable).
Broker
An individual or organization that has expertise in insurance and risk management. Typically, brokers engage in selling policies and providing services to the customers on behalf of the insurer and for this, they charge a fee/commission from the insurer.
Business Insurance Policy
A policy that insures a business entity against loss of income that caused due to natural calamities such as flood or earthquake and man-made calamities such as burglary, and employee fraud.
Cashless Settlement
A claim settlement wherein a policyholder does not need to make payments to avail benefits as mentioned under the policy.
Casualty
Bodily injury, death or any mishap caused due to an accident.
Ceded Premium
It refers to the premiums paid or payable by an insurer to another insurer for reinsurance.
Claim
A formal request made by a policyholder/ nominee to an insurance company asking for payment as per the terms mentioned under the insurance policy.
Co-payment
A pre-specified sum that a policyholder is liable to pay for, especially when he/she receives the service.
Comprehensive Cover
A Comprehensive Policy under Motor Insurance ,provides coverage against damage/loss to your vehicle and damage/loss to the third-party on the part of your fault. It also covers damage caused due to fire, theft, riot, natural disaster, or by any malicious act.
Contingent Beneficiary
It is the person named by the policyholder to become entitle to receive death benefits in case of the demise of the first nominee.
Convertible Term Policy
A term policy that a policyholder can convert to a permanent life insurance policy without any requirement of health check-up or show evidence that the insured is healthy.
Cover
The amount of risk/ liability covered by an insurance policy, generally known as the Sum Assured.
Cover Note
A temporary document that the insurance underwriter sent to the policyholder while the insurer completes the paperwork. It also serves the purpose to prove you have a motor insurance.
Coverage
The scope or degree of benefits offered in an insurance policy
Coverage Area
It refers to a specified geographic region in which the benefits of an insurance policy remain valid.
Critical Illness Rider
An additional cover that provides financial protection to the insured in case he/ she is diagnosed with one of the critical illnesses as mentioned under the policy.
Cubic Centimeter (CC)
It measures the volumetric capacity of a motor vehicle's engine. It is a major factor in determining the premium of the vehicle.
Cumulative Bonus
An increase in the sum insured by a fixed percentage upon a claim-free year. The policy needs to be renewed regularly to avail this benefit.
Death Benefit
The lump-sum amount the insurer pays to the nominee for a life insurance policy in the event of the death of the insured.
Deductible
In general insurance, it is a portion of the payment the insured needs to bear. The insurer is liable to pay when the claim amount exceeds the deductible.
Deferred Annuity
It is a retirement/annuity plan in which the policyholder begins to receive payment over a chosen period. Under this plan, you have the option to buy the annuity that serves as a regular source of income.
Depreciation
A decrease in the value of the insured property subject to wear & tear and aging. The insurance company determines the market value of the assets after subtracting its depreciation value.
Disability
It refers an impairment that may be physical, mental, emotional, sensory or combination of these that could lead to pose the restrictions on an individual's capacity to what is considered ‘normal' in day-to-day life.
Endorsement
It refers to an added provision in a policy that enables to make changes/amend the policy terms.
Endowment
An insurance policy that provides both the investment and risk coverage to the policyholder.
Escalation
A provision in an insurance contract for increasing the sum assured and the premium amount.
Ex-gratia
A voluntary payment made by the insurer for the losses where a claim does not meet the terms of the policy or the company is not liable to pay for.
Excess
It is a pre-specified portion of the claim amount that needs to be borne by the policyholder. The insurance company then pays the remaining amount.
Exclusions
There are conditions or illnesses that are not covered under the insurance policy. The insurance company does not accept claims for losses arising due to the exclusions.
Expected Loss Ratio
It is the total losses incurred by the insurer in the form of claims about the premiums earned.
Exposure
It determines an extent of vulnerability to loss.
Extended Coverage
It is an add-on to a standard fire insurance policy. It extends coverage to perils such as explosions, plane crashes, riots, hailstorm, windstorm, smoke and vehicle damage.
Face Amount
For a life insurance contract, the Face Amount is the sum of money payable to the nominee/beneficiary upon the demise of the insured person.
Free-look Period
It is the period of time during which you can return your policy to the insurer. In life insurance, you have 15 days free-look period from the date of receiving the policy document. You need to mention the reason in writing for returning the policy.
Grace Period
It is the time duration provided to the policyholder after the due date of the payment of premium. During the Grace Period, the policyholder has the option to pay for the pending premium amount without the lapse of the policy benefits and the risk cover is active during grace period.
Group Insurance
It refers to an insurance policy that provides cover for a defined group of people such as policy provided by an employer, any professional association, members of society, etc.
Guaranteed Additions
It is calculated on every thousand of sum assured, and it applies in an assured-return policy. It is added to the basic sum assured and are payable at the time of claim.
Guaranteed Insurability Option Rider
It is an optional life insurance rider that provides the policyholder to expand the life cover with no underwriting.
Guaranteed Renewable
It is an insurance policy feature under which the insurer has the obligation to renew the cover as long as the premiums are paid for the policy.
Hazard
The situation or condition that increases the chance of probable loss. It is categorized into two types,
Physical hazard: It refers to a physical environment that could increase the probability of a loss. It could be managed through insurance policy terms, and premium rates.
Moral hazard: It refers to the attitude and ethical conduct of the policy holder. The moral hazard is not manageable via policy term, so the insurer doesn't insure this risk.
Hospital Cash Benefit Rider
It is a rider under the health insurance policy that provides cash amount in the event of hospitalization upon the terms of the policy.
House Breaking
Damage to the house or premises caused due to burglary or attempts at burglary.
Householders Policy
This policy provides homeowners with coverage against the property and third-party liability.
Hull Insurance
It is a marine or aviation insurance providing cover against damage caused to an insured vessel, airplane, and its machinery.
Immediate Annuity
It is an annuity contract under which, a guaranteed income as pension starts almost immediately when you pay the premium in a single lump-sum.
Indemnity
It refers to the compensation for loss or damage. It provides an exemption from liability for damages.
Inherent Vice
It refers to an exclusion that does not provide cover against loss caused due to the deterioration of quality in property that leads to its destruction.
Insurability
All conditions or circumstances, such as applicant's age, health, risk profile, exposure to injury, and life expectancy are assessed as per the insurer's underwriting requirements to ascertain the particular applicant can be insured.
Insurable Interest
It refers to an economic stake in any subject/event for which an insurance policy is issued to alleviate the risk of damage/loss. Having the Insurable interest makes an insurance contract valid and legal.
Insurance
It is a legal contract between the insurance company and the policyholder, under which the former assures to compensate financial losses and the latter in-exchange of it, has the liability to pay the premiums to the former.
Insured
A person or property covered by an insurance policy against the probable loss/risk/damage.
Insured Declared Value (IDV)
Insured Declared Value is deemed to be the sum insured and is fixed by the insurer on the basis of the manufacturer's listed selling price of the vehicle. A fixed percentage of depreciation is deducted for arriving at IDV of your vehicle.
Insurer
An entity that offers insurance policies to indemnify for losses, usually it is another name for Insurance Company.
IRDAI (Insurance Regulatory and Development Authority of India)
IRDAI set up under the IRDA Act, 1999 is the insurance regulator in India. It aims to guard the interests of policyholders, while ensuring the development of the insurance industry.
Joint Life Insurance Policy
This insurance policy covers you and your spouse under a single contract.
Key employee
An employee whose services is quite tough to replace in case of the death or he/she become disabled.
Key man Insurance Policy
It simply refers to the life insurance taken for the key person in a business. Key man is usually the owner, founder, or key employees who are insured under this policy.
Lapse
A life insurance policy is said to be lapsed on the non-payment of pending premiums after the grace period has been finished.
Liability
It is a legal obligation to settle the losses arising from damage or injury to another person.
Liability Insurance Cover
It is an insurance policy that provides cover against loss resulting from bodily injuries or property damage to the third party.
Life Annuity
It is an insurance product that requires the annuitant to pay into the annuity when he/she is working. On the retirement, the annuitant may receive the periodic payouts (usually monthly). This insurance product also provides the option to buy the annuity by purchasing the premium as a lump-sum.
Life Assured
It refers to a person whose life is being insured/covered under a life insurance policy.
Limited Payment Life Policy
A life policy under which the policyholder pays a premium for a limited pre-specified period like for 3 ,5 ,7 years and get the policy coverage for the rest of your life.
Loading
It is an additional amount (above the base premium amount) in case the insurer assess the profile of the policyholder to be the risky one. The insurer will impose loading by lifestyle factors such as smoking, obesity, and high-blood pressure or any other as per its underwriting guidelines.
Loyalty Additions
It is an additional benefit given by the insurer to keep the policy in force. The loyalty addition is paid to the policyholder in case he/ she has paid all the premiums for a minimum specified period.
Market Value
It is the price an asset or property would fetch in the marketplace.
Material Fact
An important fact that would change the decision of the insurer if kept concealed. Falsification/ misstatement of a material fact can make a policy void.
Maturity Date
In a life insurance policy, it is the date when the policy matures after the completion of the policy term.
Money-back Policy
It comes under the Endowment Plans. In a money-back policy, the accumulated money comes back to the insured in a specified interval of time such as monthly, half-yearly or annually. In the event of death of the policyholder, the death benefit is paid to the nominee.
Morbidity
It refers to an unhealthy condition of an individual. Morbidity Rate is the probability that a person will suffer an illness or disease. It is a basic factor in determining the insurance premium rates.
Mortality
Mortality refers to the state of being susceptible to death. It is the amount charged by the insurer every year to provide the life coverage to the insured.
Net Asset Value (NAV)
It is the value of a single unit of each fund basis the risk portfolio. Net Asset Value is calculated at the end of each trading day.
No-claim Bonus
If you don't claim in a previous policy period, your policy is entitled to accumulate the NCB benefits. A No Claim Bonus (NCB) applies to general insurance products such as health and motor. The accumulated NCB helps you to lower the premium rates or increase the Sum Assured for your policy.
Nominee
It is the person chosen by the policyholder to receive the death benefits in the event of the demise of the insured.
Non-participative Policy
Under this policy, you are not entitled to receive the bonuses or share in the profit of the insurance company.
Outpatient Services
Health procedures, tests, or surgeries that do not require hospitalization.
Over Insurance
When the coverage amount for a property exceeds the actual cash value of the property insured.
Owner
The person who owns the rights of an insurance policy.
Package Policy
An Insurance Policy that combines two or more types of insurance coverage like Own damage plus third party insurance.
Paid-up Value
Upon non-payment of premiums by the policyholder after paying all premiums in full for the first three years, the policyholder is entitled to receive a reduced amount of sum assured known as Paid-up value by the insurer.
Par Value
It refers to the face value of a bond or stock.
Participating Policy
This insurance policy where the policyholder is entitled to get the dividends, bonus or share of profit to the policyholder. It is paid on an annual basis throughout the term of the policy.
Peril
Exposure to the loss, damage, injury, or grave risk.
Personal property
It refers to an asset other than land. Personal property is movable. It can be anything you own such as furniture, jewelry, and electronic items.
Point-of-service (POS)
It is a distribution arm of an insurance company which is allowed to sell simple insurance products (especially non-life insurance) that require petite underwriting.
Policy
A contract between an insurance company and a policyholder describing the terms and conditions of insurance.
Policy Loan
A loan issued by an insurer against the policy. The policy document is held as collateral by the insurance company to issue the loan.
Policy Period
It refers to the period for which an insurance policy provides coverage
Policy Term
The period for which the insurance company grants, insurance protection when the policyholder pays regular premiums. It refers to the period for which an insurance policy provides coverage
Policyholder
The owner of the policy. Also called the ‘insured’
Policyholder / Policy-owner
One who has control of the policy and is the party to the insurance contract. Typically, the policy-owner is the person who pays the premium for the policy. The policyholder can be insured as well or may be different from insured.
Pre-existing Condition
Any disease, sickness or illness that exists before issuance of the first health insurance policy.
Premium
The amount paid by the policyholder as fixed by the insurer to pay for an insurance policy.
Primary Beneficiary
The policyholder or other person/entity as nominated by the policyholder allowed to receive the policy benefits after the death of the insured.
Re-entry Option
It is an option mentioned under a renewable term life policy, wherein the policyholder at the end of the term may be able to renew the policy coverage at a pre-specified premium rate without any need to prove the insurability.
Re-insurance
It is an insurance contract when an insurance company gets further insurance from other insurance company (re-insurer) to safeguard itself from financial losses.
Re-insurer
An insurer that covers all or some parts of the probable losses of the primary insurer. These insurers provide financial protection to the insurance companies.
Reinstatement of Policy
It helps a previously terminated policy to renew after it has lapsed. If your policy has been terminated due to non-payment of premiums, you need to compensate the insurer prior reinstating of the policy.
Renewal
An act of extending the policy period by paying the requisite premium amount.
Reversionary Bonus
‘With-profit policies,' a bonus amount is added to the basic sum assured on an annual basis. It is payable at the completion of the policy term.
Riders
It is an additional cover that you can choose with life, health, or motor insurance policy. You need to pay an extra premium amount to include rider under the policy.
Risk
The possibility of losing something of value such as physical health, financial wealth, social status, or emotional well being.
Secondary Beneficiary
A person or entity as nominated by the policyholder grants with the rights to receive policy benefits after death of the insured (original nominee).
Single-premium Policy
A life insurance policy that requires the policyholder to pay a single premium in lump-sum and ensures coverage throughout the policy term.
Subrogation
A legal right that enables a party (your insurer) to make a payment towards your damages which is owned by another party (other driver's insurer) and then recover the money from the other party that owes the debt.
Suicide clause
This clause in a life insurance policy states that no death benefit will be paid out if the policyholder commits suicide within the first or second year of commencement of the policy.
Sum Assured
It is the amount that the nominee will receive in case of death of the policyholder during the policy term.
Surrender Value
It is an amount that the policyholder is entitled to receive if he/she does not want to continue the policy before its maturity, provided the insured has paid at least three years' of premiums.
Survival Benefits
These benefits apply for an investment-based policy in case the policyholder survives at the maturity of the policy. You are entitled to receive an amount equal to the sum assured plus guaranteed additions through the policy term.
Temporary Total Disability
A short-term physical condition wherein a person is not able to work that affects his/her earning capacity temporarily, but it is expected to recover completely from such disability.
Term
A specified period for which the policy is in force.
Term Plan
A life insurance policy that provides life cover at a fixed rate of premium for a specified time period.
Terminal Bonus
A bonus amount paid to the policyholder on the maturity of a participating policy or nominee in the event of death.
Third Party
A person other than the insured or insurer.
Third-party Administrator (TPA)
A person or organization that helps insurance companies in processing claims and performs other administrative services as mentioned under a service contract.
Total Loss
Upon assessment by the insurer, if the repair cost or lost value of a damaged property exceeds the value under the policy, it is declared as a ‘Total Loss'.
Underinsurance
It refers to an inadequate insurance coverage by the policyholder.
Underwriter
A financial professional that assesses the risk involved in insuring a person or property. The underwriter is also determines the premiums for insurance policy basis the risk involved.
Variable annuity
An insurance contract wherein, the insurer guarantees a minimum payout at the end of the accumulation phase in a pension plan. The remaining payments may differ depending on the performance of the portfolio, you have invested in.
Vesting Date
In a pension plan, it is the date from which the annuitant (policyholder) becomes entitled to receive the policy benefits in the form of pension. In a child plan, the date from which a child owns the policy is also termed as vesting age.
Waiting Period
A specified time period for a policy that does not cover specific circumstances. In health insurance policies, there is a waiting period during which pre-existing illness or other illnesses as specified are not covered under the plan.
Waiver of Premium Rider
By choosing this rider in an insurance policy, the policyholder is waived off from an obligation to pay the further premiums in case the policyholder becomes seriously ill or disabled. This rider enables the policyholder to take the policy benefits, even when he/she cannot work.
Whole-life Insurance Policy
An insurance policy remains in force and provides cover for the entire lifetime of the policyholder.
Without-profit Policy
A life insurance policy that does not provide a share in the profits of the insurance company.
Written Premium
It is the amount of premium charged by the insurer for a policy. It is a term describing the total premiums received by an insurance company under the policies issued by them during a specific period of time.
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