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Faq

  • Who is an Authorized Representative (AR)?

    A policy holder who opens an e IA shall appoint an Authorized Representative (AR) who shall be entitled to access the account in the event of demise of the policy holder or in his incapacity to operate the e Insurance Account. The AR is entitled only to access the e IA so as to know the portfolio of insurance policies and the nominees of the respective policies held under that account. The Policy Holder can change the AR, at his discretion, during the term of the eIA. The AR is different from a nominee and has only access rights to the e IA in the event of demise of the policy holder.
  • Which type of policy is best suited for me?

    The type of policy that suits you best depends on many factors, such as your insurance objectives, your income, assets, liabilities, number of dependent members in your family and family expense. Life insurance policies are broadly classified in to three categories
    Endowment policies
    Whole life policies
    Pension policies

    Endowment policies
    Endowment policies cover the insured for a specified period. Thus, the insured may select to insure himself until retirement; e.g. if he is 25 years old, he may choose to insure himself for 35 years, until he reaches the age of 60.
    • Upon the death of the insured (during the term of the policy), the nominee receives the sum assured plus the bonus, if any. Bonus is paid for the number of years the policy was in force.

    • Upon surviving the term of the policy, i.e. upon maturity, the insured receives the sum assured plus the bonus for the term of the policy, if any. Thereafter, the insured is not covered by the policy.

    • Endowment policies are usually more expensive in comparison to whole life policies. Endowment policies are broadly classified into two types - Endowment - Without profit and Endowment - With profit.

    • Endowment - Without profit or Term products - offer the nominee the sum assured only, upon death of the insured. Upon surviving the term of the policy or upon maturity, the insured may receive the sum assured or a portion of the sum assured or a refund of the premium only. Typically, such policies are low-cost policies.

    • Endowment - With profit policies - offer a bonus (which could be guaranteed) in addition to the sum assured, upon death of the insured or at the end of the term of the policy. These policies cost more than the Endowment - Without profit policies. Currently, four types of Endowment - With profit policies are offered in the market:

    Endowment with profit policies
    • Upon death of the insured, the nominee receives sum assured plus bonus for the number of years the policy was in force.

    • Upon surviving the term of the policy or upon maturity, the insured receives sum assured plus bonus for the term of the policy. The amount receivable upon maturity is tax-free.

    • Many people prefer to buy such policies for terms that mature during their retirement period. Often, the maturity amount is utilized to supplement the pension income (pension income is taxable).

    Money back policies
    During the term of the policy, the insured receives a fixed portion (percentage) of the sum assured at regular intervals. This money received during the term of the policy is tax-free.

    Upon surviving the term of the policy or upon maturity, the insured receives the balance amount of the sum assured plus bonus for the term of the policy.

    Upon death of the insured, the nominee receives full sum assured plus bonus for the number of years the policy was in force. (Money received by the insured during the term of the policy is not deducted from the amount paid to the nominee.)

    Money back policies cost more than Endowment - With profit policies. Many people prefer to purchase such a policy to utilize the money receivable for going on a holiday, re-furnishing their homes or even re-investing the same amount.

    Child Plans
    • The child receives sum assured plus bonus (if any) at a pre-determined time. This money is receivable irrespective of the fact that the proposer is dead or alive.

    • The proposer for such a policy could be the parent/guardian/grand parent; he pays the premium for the policy.

    • In the event of death of proposer, usually no further premiums need to be paid by the family. However, depending upon the policy type, the child may or may not receive the sum assured upon the death of the insured. However, the policy continues and the child receives the sum assured plus bonus, if any, at the pre-determined time of the policy.

    • Upon survival of the term of the policy, the child receives money at the pre-determined time.

    • Such policies are best suited for planning children’s higher education and marriage expenses.

    Unit-linked Insurance Plans
    • A portion of the premium is invested in the stock market or in a mutual fund. Thus, the returns earned on such a policy are transparent (unit-linked) since they can be tracked on a daily basis.

    • The company utilizes balance part of the premium to cover insurance and administrative costs.

    • In the event of death of insured, the nominee receives sum assured plus returns earned in the market by the insurance company.

    • Upon surviving the term of the policy, the insured receives the returns earned in the stock market by the insurance company.

    Whole life Plans
    Whole life policies provide insurance until the death of the insured person.
    • Upon the death of the insured, the nominee receives the sum assured plus the bonus, if any.

    • Whole life policies typically offer no survival benefits, since there is no definitive term to the policy. However, the insured could make withdrawals or take loans against the cash value of the policy.

    • Typically, the cash value (the interest or bonus earned on the premium) of a Whole Life policy is higher than that of an Endowment with Profit policy.

    • Moreover, the premium for a Whole Life policy is paid for a longer duration of time (since the insurance coverage term is longer). However, the insured has the option of selecting the premium paying term.

    Pension Plans
    • Pension policies provide a regular sum of money to the insured or to his nominee for a fixed period.

    • The insured has the option of selecting when and for how long (term) she or he would like to receive the pension amount.

    • In the event of death of the insured during the term of the policy, the nominee has the option of taking a lump sum amount or receiving a regular pension for the remaining term of the policy.
    It is advisable to have a portfolio of policies with varied benefits, as a single policy cannot meet all your insurance objectives.

    Source: SBI Life Insurance
  • Should I use insurance as an investment?

    The primary objective of taking an insurance policy is to insure you and should be looked as an investment tool only as the secondary objective. You could use some of the insurance policies as means of investment. There are various policies offered by the insurance companies. These policies offer a fixed guaranteed rate of return or a market-linked rate of return.
  • What is Redirection?

    You can redirect your current contribution allocation percentage into various funds. It will not impact the percentage of the contribution already invested.
  • I am healthy. Why should I take health insurance?

    Insurance cover is always available for uncertain event; once we suffer from any disease it is difficult to take coverage for such disease. Life is full of uncertainties we do not know when we will be suffer from diseases and accident so, it is better to take health insurance when we are healthy. When we are healthy we have number of choices available and we can choose the best and affordable plan for us.
  • If I already have an e IA, how do I buy a new policy in electronic form?

    Once you have opened an e Insurance Account, it is quite simple to buy a new policy in electronic form. You just need to quote your unique e IA Number in your new insurance proposal form, with a request to issue policy in electronic form. Since KYC documents had already been submitted and verified when you opened your e IA, the Insurer will not do KYC again, provided there has been no change to your KYC details, making the process simpler and convenient for you.
  • Whom should I insure?

    Income producer- If you are the major earning member of your family, you need to insure yourself first.

    Working spouse - If your spouse is also earning then both of you could take an insurance cover in a joint-life policy. It is a good option for working couple since it could serve as a low-cost policy covering both of them.

    Children - If you have children you could buy an insurance policy in their names. This would also help your children to receive a certain amount of money when they opt for higher education.

    Partner/Key-person in the organization: If you have a working partner in your firm or a key-person(s) in the organization, your firm/organization could buy life insurance for them.
  • Should I take Life Insurance?

    A person who have dependents (especially if they are the primary provider) or significant debts that outweigh ones assets, then you need insurance to ensure that your dependents are looked after if something happens to you.

    However, buying life insurance doesn't make sense for everyone. If you have no dependents and enough assets to cover your debts, survivor living expenses, outstanding life goals and the cost of dying (funeral, estate lawyer's fees, etc.), then insurance is an unnecessary cost for you.
  • How much does life insurance cost?

    The cost of buying an insurance policy depends on the following factors:
    The insured person’s age, health and his nature of work
    Type of policy selected
    Sum assured
    Policy terms
    Term for paying premium and payment frequency
    Riders (if any) attached to the policy
  • How do I open an e Insurance Account (eIA)?

    To open an e IA, you need the fill out an account opening application form of the Insurance Repository along with the necessary supporting documents. Application Forms would be available in all offices of the Insurance Repository, once they are operational. They can also be downloaded from the respective website or you can fill out an application online at the website). You can also contact your Insurance Advisor (Agent) for an application form. You can submit the signed e IA application form at any Insurance Repository office. If you are applying to open an e IA at the time of buying a new Insurance Policy, it may be best to hand over the e IA form, along with the insurance proposal form, to the Insurance Company.

    To open an e IA, you need to necessarily have either a PAN or Aadhar number. When submitting your e IA application, please ensure that you provide copies of your PAN or Aadhar, Address Proof and proof of date of birth, along with a passport size photograph. You also need to show the original of address proof for verification (the list of acceptable address proof documents is given elsewhere).

insurance glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
  • Abstract

    A brief history of title to land
  • Accelerated death benefit

    A percentage of the policy?s face amount, discounted for interest, that can be paid to the insured prior to death, under specified circumstances. This is in lieu of a traditional policy that pays beneficiaries after the insured?s death. Such benefits kick in if the insured becomes terminally ill, needs extreme medical intervention, or must reside in a nursing home. The payments made while the insured is living are deducted from any death benefits paid to beneficiaries.
  • Accident & Accidental Death Benefit

    In the context of life insurance, accident or accidental death is defined as a sudden and unforeseen happening that causes disability or death of the policyholder.
  • Accident and health insurance

    Coverage for acci-dental injury, accidental death, and related health expenses. Benefits will pay for preventative services, medical expenses, and catastrophic care, with limits.
  • Accidental death benefit

    An endorsement that pays the beneficiary an additional benefit if the insured dies from an accident.
  • Accidental Death Insurance

    Accidental Death Insurance provides coverage in the event of death due to accidental injuries, but not illness. In the event of death, payment is made to the insured\'s beneficiary. And most of these covers provide for cases for bodily injury (e.g., the loss of a limb), where the insured receives a specificed sum.
  • Accounts receivable (debtors) insurance

    Indemnifies for losses that are due to an inability to collect from open commercial account debtors because records have been destroyed by an insured peril.
  • Accumulation Period

    The time interval between the commencement of the policy and the time when benefits are paid out. It is established by the insured.
  • Activities of daily living

    Activities-such as eating, bathing, toileting, dressing, and continence-that trig-ger payment in a long-term care insurance policy, if at least some of them cannot be performed by the insured.
  • Acts of god

    Perils that cannot reasonably be guarded against, such as floods and earthquakes.
  • Actual cash value

    A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation.
  • Actual loss ratio

    The ratio of losses incurred to premiums earned actually experienced in a given line of insurance activity in a previous time period.
  • Actuarial cost assumptions

    Assumptions about rates of investment earnings, mortality, turnover, salpatterns, probable expenses, and distribution or actual ages at which employees are likely to retire.
  • Actuarial Cost Method

    A method that determines contributions that would be made under an insurance plan.
  • Actuary

    An insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance firms? reserves, determines rates and rating methods, and determines other business and financial risks.
  • AD&D

    Accidental Death and Dismemberment Benefits
  • Additional insureds

    Persons who have an insurable interest in the property/person covered in a policy and who are covered against the losses outlined in the policy. They usually receive less coverage than the pri-mary named insured.
  • Additional living expenses

    Extra charges covered by homeowners policies over and above the policy-holder?s customary living expenses. They kick in when the insured requires temporary shelter due to damage by a covered peril that makes the home temporarily uninhabitable.
  • Adjustable Life Insurance

    A facility allowing a life insurance policy owner to change the insurance plan, increase or decrease the premium and make changes in the protection period.
  • Adjuster

    An individual employed by a property/cas-ualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyhold-ers, and receive a portion of a claims settlement. Inde-pendent adjusters are independent contractors who adjust claims for different insurance companies.
  • Admitted company

    An insurance company licensed and authorized to do business in a particular state or country.
  • Adverse selection

    The tendency of those exposed to 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. In the case of natural disasters, such as earthquakes, adverse selection concentrates risk instead of spreading it. Insurance. works best when risk is shared among large numbers of policyholders.
  • Affinity sales

    Selling insurance through groups such as professional and business associations.
  • Affirmative warranty

    An agreement between an insurance company and an agent, granting the agent authority to write insurance from that company. It specifies the duties, rights, and obligations of both parties.
  • After Tax Rupees

    This refers to the disposable income that the policy holder has in his hands after paying all tax dues during a particular financial year under the Income Tax Act.
  • Age Limits

    The maximum and minimum ages above or below which an insurance company will not accept applications for insurance from or will not renew a policy with a person.
  • Agent

    Insurance is sold by two types of agents: inde-pendent agents, who are self-employed, represent several insurance companies and are paid on commission, and exclusive or captive agents, who represent only one insurance company and are either salaried or work on commission. Insurance companies that use exclusive or captive agents are called direct writers.
  • Agent (Life Advisor)

    A representative of an insurance company authorized to sell insurance policies.
  • Aggregate deductible

    A type of deductible that applies for an entire year in which the insured absorbs all losses until the deductible level is reached, at which point the insurer pays for all loses over the specified amount.
  • Aggregate limits

    A yearly limit, rather than a ?per occurrence? limit. Once an insurance company has paid up to the limit, it will pay no more during that year.
  • Aleatory contract

    A legal contract in which the outcome depends on an uncertain event. Insurance contracts are aleatory in nature.
  • All-risk agreement

    A property or liability insur-ance contract in which all risks of loss are covered except those specifically excluded; also called ?open perils policy.?
  • Alternative dispute resolution (ADR)

    Alternative to going to court to settle disputes. Methods include arbitration, where disputing parties agree to be bound to the decision of an independent third party, and mediation, where a third party tries to arrange a settlement between the two sides.
  • Alternative markets

    Mechanisms used to fund self-insurance. This includes captives, which are insurers owned by one or more non-insurers to provide owners with coverage. Risk-retention groups, formed by members of similar professions or businesses to obtain liability insurance, are also a form of self-insurance.
  • Ancillary charges

    In hospital insurance, covered charges other than room and board.
  • Annual statement

    Summary of an insurer?s or rein-surer?s financial operations for a particular year, including a balance sheet.
  • Annual-premium annuity

    An annuity whose purchase price is paid in annual installments.
  • Annuitant

    : An individual receiving benefits under an annuity.
  • Annuity Certain

    An insurance contract that provides an annuity for a certain number of years, irrespective of whether the insured is alive or dead.
  • Annuity Consideration

    The payment that an annuitant makes for an annuity.
  • Annuity units

    A measure used in valuing a variable annuity during the time it is being paid to the annui-tant. Each unit?s value fluctuates with the performance of an investment portfolio.
  • Apportionment

    The dividing of a loss proportion-ately among two or more insurers that cover the same loss.
  • Appraisal

    A survey to determine a property?s insura-ble value, or the amount of a loss.
  • Arbitration

    Procedure in which an insurance company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a third party.
  • Arson

    The deliberate setting of a fire
  • Assessable policy

    A policy subject to additional charges, or assessments, on all policyholders in the company.
  • Asset-backed securities

    Bonds that represent pools of loans of similar types, duration and interest rates. Almost any loan with regular repayments of principal and interest can be securitized, from auto loans and equipment leases to credit card receivables and mortgages.
  • Assign

    To use life insurance policy benefits as collat-eral for a loan.
  • Assignee

    Assignee is the person to whom the title, rights and benefits under a life policy are assigned.
  • Assignor

    Assignor is the policyholder who transfers the title, beneficial interest and rights under the policy to another individual.
  • Asymmetric information

    An insured?s knowledge of likely losses that is unavailable to insurers.
  • Attained Age

    It is your current age.Your attained age is one of the factors life insurance companies use to determine your premiums. As the older you are, the probability of death during the period of insurance cover i.e life insurance risk increases and so does the premium. Higher the risk, higher the premium.
  • Authority

    The Insurance Regulatory and Development authority, IRDA established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 is the regulator for the insurance sector.
  • Auto insurance premium

    The price an insurance company charges for coverage, based on the frequency and cost of potential accidents, theft and other losses.
  • Automatic coverage

    An insurer agrees to cover accidents from all machinery of the same type as that specifically listed in the endorsement.
  • Automatic treaty

    An agreement whereby the ceding company is required to cede some certain amounts of business and the reinsurer is required to accept them.
  • Average adjusters

    A name applied to claims adjusters in the field of marine insurance.
  • Aviation insurance

    Commercial airlines hold prop-erty insurance on aeroplanes and liability insurance for negligent acts that result in injury or property damage to passengers or others. Damage is covered on the ground and in the air. The policy limits the geographical area and individual pilots covered.