Glossary 5

Glossary 5

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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REBATES: are the discounts offered on the premium levied by Insurance Companies. The rebates could be based on the Premium Payment Frequency, Term or the amount of Insurance Cover (sum assured).

REVIVAL OF A LAPSED POLICY: In case your policy has lapsed due to non-payment of premium, you can revive the lapsed policy by paying arrears with interest and providing new documentation. This can be done only within a stipulated period of time from the date of lapse, and before the date of maturity of the policy.

RISK: is the probability of a loss. This chance of something happening (a factory catching fire for instance) is what is the subject matter of insurance as far as it is a quantifiable financial loss.

SALARY SAVING SCHEME (SSS): comes into operation when the employee makes a written request to the employer for direct deduction of the premium due to the insurer from the monthly salary payable and remittance to the insurer.

SPECIAL REVIVAL SCHEME: is available for policyholders who cannot afford full settlement of arrears. Arrears of premium have to be paid only for two years.

STANDARD LIFE: Any person who, according to the insurer's underwriting standards, is eligible for insurance at the normal rates of premium, as a result of meeting the normal health standards.

SUBROGATION: Since insurance is a method of transferring risk from the insured to the insurer, the insurer is said to step into the shoes of the insured to take care of the monetary obligations arising out of the loss. In the same way the rights of the insured under the circumstances, say to receive compensation for the loss from some other authority, or to proceed legally against a third party that has caused the loss will be subrogated to the insurance company so that it can pursue all methods of getting back some of the money it pays as claims.

SUB-STANDARD LIFE: Any person considered as under-average for granting insurance cover due to reasons such as occupation, dangerous lifestyle or personal or family history of some disease. The insurance company can accept insurance proposal of such a person with increased premium or restrictions on coverage. In some cases, the proposal can be rejected.

SUICIDE CLAUSE: The insurance company will not pay the benefits under the policy if the insured person commits suicide or dies due to attempted suicide within a certain period from the date of the issue of the policy document.

SUM ASSURED: is the amount payable on occurrence of the specified event for which the policy is taken, such as death or completion of term.

SUM INSURED: is the monetary limit of liability of insurers under a policy.

SURCHARGE: is the extra loading on the normal premium, due to any cause, such as monthly premium payments, etc.

SURRENDER: is the voluntary termination of the policy contract by the policyholder before it matures into a claim. The insurer pays the policyholder a surrender value for his policy. This value is normally calculated as a percentage of the premium paid or as a percentage of the paid up value.

SURRENDER VALUE: The amount payable by the insurance company if you foreclose a policy after the premium is paid for a minimum period as stipulated.

SPECIAL SURRENDER VALUE: The surrender value calculated as per a formula announced by the insurer from time to time, which will be paid if it is more than the guaranteed surrender value on foreclosing the policy.

SURVIVAL BENEFIT: is the benefit payable to the life assured if he survives up to a specified date during the term of the policy.

TERM: is the period during which the policy remains in force. The sum assured is payable only if the specified event occurs during this period.

TERM INSURANCE: Under this scheme, you pay premium for a certain number of years, and your nominee will receive the money upon your death; however, you will not receive anything if you survive the term.

TERM INSURANCE PLANS: provide only a death risk cover. These policies do not have any savings element built into them. The Sum Assured is receivable only in case of death during the term of the policy. If the insured survives the term the entire sum assured may not be payable but a smaller maturity benefit may be payable.

THE ORIENTAL INSURANCE COMPANY LIMITED: This GIC subsidiary was set up in and is headquartered in Delhi.

UNIT LINKED INSURANCE PLAN: is designed to compensate for inflation. The premium is split into two parts, one part is used to provide risk cover and the second component is converted into units and invested in equities or other markets.

UNITED INDIA INSURANCE COMPANY LIMITED: This GIC subsidiary was set up in and is headquartered in Chennai.

UTMOST GOOD FAITH: All insurance contracts are on the basis of the concept of 'Uberrima Fides', or Utmost Good Faith. Since the insured has the advantage over the insurer as far as the conditions under which insurance is being bought - say the true state of his health, or the dangers that his house faces from fire - the insurer has the obligation to declare all such material facts with utmost good faith to the insurer so that he may sell you the policy while in possession of the required information.

VESTING AGE: is the age at which life assured becomes absolute owner of the policy, which in the case of minors is 18 years (minimum age for a valid contract).

WHOLE LIFE INSURANCE: remains in force through out the lifetime of the life assured. The sum assured is payable in case of the insured's death. Premiums too are payable till death.

WITH PROFIT: A policy of insurance can be of the 'with profit' kind or 'without profit'. In the first case, the policyholder is eligible to have a share in the profits of the insurance company at the cost of a higher premium.

WITHOUT PROFIT: A 'without profit' policyholder is not eligible to have a share in the profits of the insurance company and only the sum assured under the policy will be paid on the maturity of the policy or on death as the case may be.

Source: http://www.sbilife.co.in/sbilife/application?pageid=CorporateGroup&CorporateId1=glossary4