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Faq

  • What is Group Life Insurance?

    This scheme provides insurance coverage to a group of people under one contract. These schemes are provided for employees, associations, societies, etc. group insurance are more affordable than other individual insurance plans and also beneficial to those who cannot afford individual life insurance.

  • What is Deferment Period?

    Period between the subscription date of an insurance-cum-pension policy and the time at which the first installment of pension is received is called as deferment period.

  • What is a Whole Life insurance product?

    Whole life insurance risk covers the death of the insured, whenever it may happen. It means that there is no fixed term under whole life insurance. Most policies provide a dividend to the policy holder which helps with retirement.

    There are two variations in the whole life insurance products i.e.

    Pure Whole Life Insurance: - where premiums are payable continuously throughout the life of the insured till death. Risk coverage is for the entire duration of life and the life insured amount is paid on the happening of the death of the insured at any time.
    Limited Payment Whole life Insurance: - where premiums are paid for a limited and shorter period and the option of the insured or till death if earlier. Risk coverage is however throughout the life of the insured.

    Source: SBI Life Insurance

  • What are the various types of insurances?

    The insurance sector is classified into Life and Non-life or General insurance
    Under Life insurance, an individual’s life is covered. In simple terms, the insured’s nominee will receive a certain amount of money from the insurance company if the insured individual dies within a specified time.
    Under General Insurance, everything is covered. Thus, an individual could insure himself for his health, property, vehicle, travel, office, shop, education and even pets.

  • What do I do if I need to make any changes to my policy or e IA? Do I submit a request to the Insurance Company or to the Insurance Repository?

    It is best to submit ALL requests in respect of either your e IA or any of your electronic policies to the Insurance Repository. If the changes are with respect to an account level detail (like address or phone number), the Insurance Repository will execute the change after the necessary KYC verification, if any. The Insurance Repository will then intimate the changes to all the Insurance Companies whose policies are held in that e IA, so that the changes are effected in all the policies, in one go (so there is no need for the policy holder to approach the various insurance companies individually for the changes).

    In case of any changes at the policy level, the Insurance Repository is expected to forward the request to the respective insurance company and ensure that the same is executed and reflected in the electronic policy held with the Insurance Repository.

  • What is vesting age?

    The age at which you start receiving pension in an insurance-cum-pension plan is known as vesting age.

  • How do I understand a life insurance Policy?

    It is necessary to know the following terms in order to understand a life insurance policy:

    Premium - the amount of money you have to pay to continue your insurance coverage.
    The premium amount depends upon
    • Your age
    • Policy selected
    • Mode of premium payment
    • Term of premium payment
    • Term of the policy

    You could choose to pay premium monthly (as a deduction from your salary), quarterly, half yearly or annually. However, there are Single premium policies where you pay premium once only (hence you do not have the facility to make the effort of paying premium regularly).

    Term - the number of years you choose to insure yourself.
    The longer the term the lower the premium. Policy terms vary from a single year to a maximum of 55 years. Not all policies offer you a range of terms.

    Premium paying term - the number of years you pay premium on your policy.
    The longer the premium paying term, the lower the premium. Usually the premium paying term is the same as the policy term. However, some policies offer you the option of selecting a premium paying term that is lower than the policy term.

    Sum Assured / Face amount - the amount of insurance cover you have or the minimum amount your family receives in the event of your demise.
    Your family could get more than this amount based on the type of policy or riders that you select.

    Bonus / Participating profit - is declared by the insurance company each year as a proportion of the sum assured. This amount could vary; it could be different for different policies and terms.
    Although declared each year, the bonus is a lump sum payment made to the insured person upon maturity or to his family upon death, in addition to the sum assured.

    Bonus is based on an insurance company’s assumptions about the future performance. Like any other assumption, actual results will be more or less favourable. The longer the time being projected, the greater the likelihood of variance from the predicted values. Not all companies guarantee the amount of bonus on each policy.

    Guaranteed Addition - is a declaration made by the insurance company; it states that irrespective of the financial results of the company, the company will pay the guaranteed amount of money, to the insured or his nominee.
    Like the bonus amount, this is a lump sum payment made to the insured upon maturity or to his family upon death, in addition to the sum assured.

    Survival Benefit - is the amount of money received at pre-fixed, regular intervals by the insured person, upon survival of the term of the policy.
    Often, money received upon maturity or at the end of the term of the policy is also referred to as Survival benefit.

    Maturity Benefit - is the amount of money received by the insured, upon survival of the term of the policy.
    In case of policies that offer a bonus, the sum assured plus the bonus for the term of the policy is paid to the insured upon maturity. In addition, some policies offer a loyalty addition, which is paid as a proportion of the sum assured and is based on the term of the policy.
    In case of policies that offer no bonus, upon maturity, the sum assured or a refund of the premium or no money is receivable by the insured (depending on the type of policy selected).

    Cover or Death Benefit - is the amount of money the nominee receives from the insurance company upon the insured’s death. In addition to the sum assured, this would include the bonus, if any.
    If additional riders such as Accident Death Benefit or Additional Sum Assured have been selected, the amount of money receivable by the nominee could be higher.

    Returns or Pre-tax yields - Interest earned on the premium, on a compounded basis, is the pre-tax yield.

    Post-tax yields - If the premium paid for a life insurance policy is used as a tax deduction under section 80C, then the effective premium paid by the insured is lower. Interest earned on the effective premium, on a compounded basis, is known as the post-tax yield.

    Source: SBI Life Insurance

  • What is the guaranteed Savings/bonus applicable under a Life Insurance Policy?

    There are some insurance policies that guarantee the amount of money you would receive upon maturity. Typically, this amount is a proportion of the sum assured such as a bonus or a guaranteed addition. Lets say bonus is Rs 50 per Rs 1000 of the sum assured and you have an insurance policy for a sum assured of Rs 100,000 then you earn a bonus of Rs 5,000 each year on the sum assured.
    Other policies may offer you a guaranteed bonus as a percentage such as a guaranteed addition of 3.5% per annum on a compounded basis.

  • What do I need to pay to maintain electronic policies in my e IA? And what is the fee for converting my existing paper polices into electronic policies?

    All the services provided by Insurance Repositories are absolutely FREE of charge to policy holders. Policy holders need not pay anything extra to buy an electronic policy or to convert an existing paper policy into electronic form. Similarly they need not pay anything to avail of any services from the Insurance Repository, including online premium payment and services at the respective online portal.

  • 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
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insurance glossary

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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.
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