Glossary 4

Glossary 4

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 !
Categorise by alphabets


MARRIAGE ENDOWMENT PLAN: The term of these plans is fixed in relation to the likely time of the child's marriage. The sum assured is payable only at the end of term. Even if the life assured dies during the term of the policy, the sum assured will be paid only at end of term. Premium payment, however, ceases on death of life assured.

MATERIAL FACT: Facts that may have a bearing on the decision by the insurer to give or not to give insurance in a particular case, and what premium to charge.

MATURITY BENEFIT: is the benefit amount payable to policyholder if he survives until the policy matures, in other words, if he survives till the end of the term of the policy.

MATURITY CLAIM: is the amount payable at the end of the term of the policy.

MONEY-BACK PLANS: are a type of endowment plan where a part of the sum assured is payable during the term of the policy. Generally there are 4-6 payouts during the term of the policy. However, notwithstanding the periodical payouts, the sum assured at risk (payable on death) continues to be same during the term of the policy; that is if the life assured dies during the policy term the entire sum assured will be paid to him. No deductions will be made for a payout that might have been made.

MORAL HAZARD: A situation where insurance is being taken with the ulterior motive of staking a (false) claim. This could be where the loss has already taken place, or where there is a pre-existing condition that is left undisclosed, or a situation where the insured is facing heavy losses from other activities and is seeking to buy insurance with a view to collecting a claim and offsetting his losses.

MORTALITY: The probability of death of a typical person at various ages in a given group of people.

NATIONAL INSURANCE COMPANY LIMITED: This GIC subsidiary was set up in and is headquartered in Calcutta.

NEAR BIRTH DAY: The age on the nearest birthday (used for calculating premium).

NEW INDIA ASSURANCE COMPANY LIMITED: A subsidiary of GIC, the company was set up in and is headquartered in Mumbai.

NOMINEE: is the person nominated by the life assured to receive the policy money in case of the death of the life assured. However, nomination does not indicate any transfer of rights, titles and interest of the policy during the lifetime of the life assured. Nomination can be changed either through a will or by an endorsement on the policy. Nomination is normally not required in the case of a Joint Life Policy. However to protect their interests in case of a natural calamity where it is hard to establish the proof of the earlier death, it is recommended that the joint policy holders appoint a common nominee

NON-MEDICAL: Policies issued without a medical examination, normally permitted to persons below a certain age, employed in certain institutions and for sums assured below a certain amount.

NON-PARTICIPATING / WITHOUT PROFIT POLICIES In these plans the policyholder is only paid the Sum Assured. He has no claim over the surplus generated by the insurer.

NON-STANDARD LIFE: Any individual, who cannot be granted a policy under normal rates of premiums but can be granted with an extra premium over normal rates of premium, is considered as a Non-Standard Life.

ORDINARY REVIVAL REQUIRING DECLARATION OF GOOD HEALTH IN A SIMPLE FORM can be effected if:
Premium arrears are cleared within seven months from the date of lapse( policy issued at ordinary rates)
The policy is an endowment scheme and the premium arrears have been cleared in the 12 - 24 months prior to maturity date
The new proposal can be considered under non-medical scheme
In arrears are cleared in the 12 months prior to the date of maturity in case of high-risk plans like money-back scheme.
The arrears are paid after 12 months but before 18 months from the date of lapse and the policy has been in force for greater of at least 10 years or half the total term of the policy, whichever is more.


ORDINARY REVIVAL WITHOUT PRODUCING EVIDENCE OF GOOD HEALTH: can be effected if premium is paid within six months of due date of first unpaid premium. This facility, however, is extended only to pure survival benefit policies. Schemes that carry a death cover cannot be revived this way.
If the policy has been in force for at least five years, ordinary revival can be effected if arrears are paid within 12 months of the date of first unpaid premium.
In the case of endowment type policies, ordinary revival can be effected if the arrears are paid during the last 12 months prior to the date of maturity.


PAID UP POLICY: Generally, a policy under which the premiums have been paid for the full paying term or premiums are not being paid upto a certain period. The value of insurance coverage will be reduced to a sum that is worked out based on a pre-defined formula which has a relation to the period for which premiums have been paid and remain payable.

PAID UP VALUE: When premium payment is stopped by the proposer during the term of the policy paying period, and does not or cannot make further payments, the policy can become 'paid up', that is, it can be frozen in terms of benefits which will be a portion of the sum assured and no further premiums need be paid for that benefit level.

PARTICIPATING /WITH PROFIT POLICIES: Policies where the policyholder 'participates' in the surplus generated by the insurer are called participating or with profit policies.

PERIL: is a contingency or an accidental happening, which may be covered or excluded under a policy of insurance.

PERMANENT DISABILTY: Irrevocable loss of entire sight of both eyes.
Amputation of both hands at/above the wrists.
Amputation at or above both ankles.
Amputation of one hand and one foot.


POLICY: is a stamped document, which provides evidence of the contract of insurance between the insurer and the insured.

POLICY REVIVAL: A lapsed policy can be revived before the date of maturity within five years from the date of first unpaid premium. The policyholder needs to submit proof of his ability to pay future premium. All premium arrears, with interest, have to be cleared. SBILife reserves the right to accept the offer for revival. Evidence of good health may be required.

PREMIUM: is the monetary consideration paid by the insured to the insurer for an insurance cover. The premium can be for the entire policy period (as in the case of annual policies) or payable periodically (as in life policies). In India premiums have to be paid before coverage can begin and the insurer can be 'at risk', a provision under section 64 V B of the Insurance Act.

PREMIUM PAYING TERM (PPT): is the term for which premium has to be paid. In some policies, the term for which premium is to be paid by the insured is less than the term of the policy.

PREMIUM PERIODICITY: For life policies premium are payable periodically. They are payable annually, half-yearly, quarterly and monthly. Rebates are usually offered on annual and half-yearly premium payments and loadings on monthly payments.

PREMIUM WAIVER BENEFIT (PWB): Children’s policies provide this benefit where the future premiums payable upto the vesting date are waived in the event of your death.

PROPOSAL FORM: The Application in the required format sent by the proposer (person who wants to buy the contract) is the Proposal Form.

PROPOSER: is the person who buys the insurance policy.

PURE ENDOWMENT PLANS: are policies where the amount is payable by the insurer to the policyholder only at the end of the specified term. They serve as savings instruments.

Source: http://www.sbilife.co.in/sbilife/application?pageid=CorporateGroup&CorporateId1=glossary3