Glossary 2

Glossary 2

Confused about all the jargons being used, let us help you know more about various terms being used in Insurance.
Here's an easy guide to the various technical terms to help you understand better !
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ABSOLUTE ASSIGNMENT: If absolute assignment is done then there can be no reversion of the assignment to the assignor or his estate.

ACCIDENT BENEFIT: If you pay a small additional premium, your nominee will receive twice the sum assured upon your death by accident. If you suffer a permanent disability due to the accident, then the amount is paid to you in installments, and subsequent premiums under the policy are waived.

AGENT: Is the person authorised by Insurance Regulatory & Development Authority (IRDA) to sell its policies.

ANNUITY: (RETIREMENT BENEFIT) Is a periodic payment (usually monthly) payable by the insurer to the life assured. Generally, it is used in context of retirement benefits. Under this type of insurance contracts, the life assured pays a fixed premium (which could be a lumpsum or a staggered payment) and the insurer, in return, provides the life assured a fixed amount of income throughout his/her lifetime.

ANNUITY CERTAIN: (Annual Payments) These annuities are payable for a certain minimum period and if the policyholder dies during this period, the remaining instalments are paid to the beneficiary of the policy. These annuities operate as any normal annuity after the end of the certain period, i.e. payments will be made throughout the life of the life assured. No payments are made to the beneficiary after the death of the life assured, if he outlives the certain period.

ASSIGNMENT: Is the transfer of the rights, titles and interest of the policy by the assignor to the assignee. The assignor is the absolute owner of the policy. He/She could be the proposer, the life assured or the absolute assignee. Nomination is automatically cancelled by Assignment .


BANKERS ORDERS: Bank is instructed to pay premium on due date on behalf of the insured.

BENEFIT POLICY: In some cases the extent of loss cannot be quantified in monetary terms (in life insurance for instance), and hence the amount payable under a life policy is a benefit and not an indemnity. It also means that the extent of compensation need not be restricted to the sum assured under one specific policy and that payment under other policies if they exist can be collected too.

BONUS: The insurance company periodically values its assets and liabilities. The premium payments that it receives from you are used for three purposes: to settle claims, to make investments, and to pay expenses. If the insurance company makes profits, it declares a bonus for a certain period for its policyholders. It can disburse this bonus to you in three ways: the bonus is added to the value of the policy;the bonus is distributed to you physically; or your future premium payments are reduced. In India, generally the first method is adopted for with profit policies, and is paid to you upon maturity of the policy.

CHILDRENS DEFERRED ASSURANCE PLANS: Are schemes under which a minor child is the beneficiary. The parent proposes for insurance on the life of the minor and pays premiums. The risk on life of child begins at a specified age. The period before the specified age is attained is called Deferment Period.

CLAIM: An insurance contract is a promise to pay certain sums under certain conditions. Making a claim is invoking that promise and if it is in accordance with what is set out in the contract then it is admissible and can be payable if all other terms and conditions of the contract are met.

CLAIM AMOUNT: It is the amount payable by the insurer under a policy on a claim arising.

Source: http://www.sbilife.co.in/sbilife/application?pageid=CorporateGroup&CorporateId1=Glossary