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Glossary

The glossary helps you improve your understanding of the terms used in insurance. Your knowledge of the insurance business will empower you to make smart decisions that are relevant to your financial needs and risk profile.

To locate a word of your choice click through the alphabetical index below.
A - K | L - T | U - Z
     
A
Accelerated death benefit rider
A life insurance policy providing for payment of an additional cash benefit related to the face amount of the base policy when death occurs by accidental means.
Accidental death insurance
Insurance providing payment if the insured's death results from an accident.
Attained Age
Your current age. Your attained age is one of the factors life insurance companies use to determine your premiums.
B
Backdating
A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age of the consumer at issue lower than it actually was, in order to get lower premium.
Beneficiary
The person designated to receive the death benefit when the insured dies.
C
Cash value
The equity amount or 'saving' accumulation in a whole life policy.
Claim
Notification to an insurance company that payment of an amount is due under the terms of the policy.
Conditional receipt
Given to policy owners when they pay a premium at the time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt / proposal form / policy document.
Contestable clause
A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy.
Coverage
Another word for insurance. Insurance companies use the term coverage to mean the Rupee amount of insurance purchased.
Convertible term
A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.
D
Death benefit
The amount of money paid to the beneficiary when the insured person dies.
Double indemnity
Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.
E
Evidence of insurability
Any statement or proof of a person's physical condition, occupation, etc. affecting acceptance of the applicant for insurance.
Exclusions
Specific hazards listed in a policy for which benefits will not be paid.
Expiry
The termination of a term life insurance policy at the end of its period of coverage.
 
F
Face amount
The amount of insurance provided by the terms of an insurance contract, usually found on the first page of the policy. In a life insurance policy, the death benefit.
Final expenses
Expenses incurred at the time of a person's death. These include, funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes. Depending on their circumstances, the survivors may also want to pay the outstanding balances of mortgage and loans.
Fixed benefit
A death benefit, the amount of which does not vary.
G
Grace period
Period of time after the due date of a premium, during which the policy remains in force.
Graded premium policy
A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.
Guaranteed term
A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.
Guaranteed insurability (guaranteed issue)
Arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability.
I
Incontestability clause
A clause in the policy providing that if a policy has been in effect for a given length of time, the insurer shall not be able to contest the statements contained in the application.
In force
Insurance on which the premiums are being paid or have been fully paid.
Insurability
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.
Insurance policy / contract
The document which serves as the contract between the insurer and the insured.
Insured
The party who is being insured. In life insurance, it is the person because of whose death the insurance company would pay out a death benefit to a designated beneficiary.
Insurer
Party that provides insurance coverage, typically through a contract of insurance.
Increasing term insurance
Term life insurance in which the death benefit increases periodically over the policy's term.
Term life insurance in which the death benefit increases periodically over the policy's term.
 
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