Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin

10 Life Insurance Terminologies a Policyholder Should Know

Published On May 05, 2021

Life insurance has several terminologies that a layman might find confusing, but they are actually not. It is important to understand these terminologies to make an informed decision when buying life insurance plans

This article helps you understand some of the basic terminologies that help you become an informed policyholder and empower you to manage your policy better. Read them below:

1. Policy owner/policyholder

Policyholder is the one who proposes to buy a life insurance policy and pays the required premium. He/she is the owner of the policy and may or may not be the life assured.

2. Life assured  

Life assured is the insured individual. He/she is one for whom the life insurance policy is bought to cover the risk of untimely death. Mainly, the breadwinner of the family is the life assured. It is not necessary that the life assured is the policyholder. For example, a husband can buy a life insurance policy for his wife, who is a homemaker. As the husband pays the premium, he is the policyholder, whereas the wife is the life assured.

You may also like to read:- Elementary Guide: Features of Life Insurance

3. Sum assured (coverage) 

Sum assured is the amount that an insurance company promises to pay to the policyholder or the beneficiary of the insured if the terms and conditions of the policy materialize. Simply put, sum assured is the coverage and the total amount that you are insured for. A policyholder choses the sum assured when buying the policy. 

4. Nominee/beneficiary  

The role of the nominee is limited to receiving the benefits in case the life insured passes away during the policy term. In case the life insured survives the policy tenure, then he/she will avail the policy benefits alone. The nominee can be changed by the policyholder anytime during the policy tenure. Also, there can be more than one nominee, who could even be a minor.  

Note that the nomination is possible in the policies where the policyholders and life insured are the same. If the policyholder and life insured are not the same, then the nomination is not allowed as the policyholder is there to receive the death benefit, if the life insured passes away during the policy term. 

5. Premium

Premium is the amount paid by the policyowner to enjoy the policy benefits and to keep the policy active. In case you are unable to pay the policy premium before the policy due date or during the grace period, then the policy will terminate.

You may also like to read:- Whole Life Insurance: Compare & Buy Whole Life Insurance Plans Online

6. Due date

Due date is the date on which the premium falls due. 

7. Grace period

Grace period is the extension in the number of days that the insurance company gives in case you are not able to pay the renewal premium on time. In case of monthly premium mode, the grace period is of 15 days, whereas in case of annual premium mode, the grace period is of 30 days. In case the policyholder does not pay the premium during the grace period, then the policy will get lapsed. 

8. Surrender value

Surrender value is the amount that the life insurance company pays to the policyholder in case the policyholder decides to discontinue the policy before maturity. To know if a policy offers any surrender value or not, you must thoroughly read the policy terms and conditions. 

9. Free look period

Free look period is a time frame within which one may choose to return the purchased policy. It is applicable to all new life insurance plans. In case you don’t find the policy terms and conditions satisfactory, then you can return the policy. The insurance company will refund the premium after making some deductions like expenses incurred on stamp duty, medical examination, etc. Free look period can be of 15 days or 30 days after receiving the policy document. 

10. Paid up value

If the policyholder discontinues paying the premium after some period, then the insurance companies will offer them an option to convert the policy into a reduced paid up policy. This option reduces the sum insured in proportion, to the number of premiums paid. If other benefits related to sum insured are payable, then these benefits will be related to the reduced sum insured, that is the paid-up value.

Must Check

Term Insurance

Also Read

How To Save Tax With Life Insurance ?


These were the simple basic life insurance terminologies that will help you gain a better understanding of life insurance. In case you still have any doubt regarding any of the terminologies mentioned above, you can get in touch with the customer care executives at InsuranceDekho and get your queries solved.  

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 50 Lacs+ happy customers
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.