Life Insurance Jargons Every Policyholder Should Know About
Published On Mar 02, 2022
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If you're wondering what a life insurance policy is, it's an agreement here between an individual and an insurance provider wherein the insurance company offers economic security towards the policyholder in return for monthly expenses (known as premiums). According to the concept of life insurance, the insurer (insurance company) pays an amount promised to the policyholder or specified nominees in the event of the policyholder's untimely death in exchange for interest payments paid towards a life insurance policy.
According to the agreement, the insurance company will pay the individual or his family a payout after a specific period of time in the case of the policyholder's death or if the policy matures. There are several types of life insurance plans available to meet the demands and requirements of policyholders. Before purchasing life insurance, it is important to understand the definition, advantages, and features. To get to know about life insurance jargons that policyholders should know, read on.
What Are Some Life Insurance Jargons That Every Policyholder Should Know?
Following are some of the life insurance jargons that every policyholder should know about -
- Policyholder - The policyholder would be the one who offers and pays the premium for the life insurance policy. The policyholder is the policy's owner, and the life guaranteed may or may not be the policyholder.
- Life Assured - The insured individual is the life assured. The person for whom a life insurance policy is acquired to hedge against the risk of an early death is known as the life assured. The family's breadwinner is, first and foremost, the family's lifeline. The policyholder may well not be assured of life. For example, a spouse may purchase a life insurance policy for his wife. Because the woman is a stay-at-home mom, the husband pays the premium, making him the policyholder and the wife the life assured.
- Sum Assured/ Coverage - The purpose of life insurance is to provide coverage for the insured's life. When purchasing a life insurance policy, the monetary loss that may occur due to the death of the life guaranteed is often selected as a life cover. 'Sum Assured,' in technical words, is an amount that the insurer promises to pay in the case of the insured person's death or the occurrence of any other covered event. When comparing plans online, purchasing a life insurance plan, and reading the policy papers, you might come across the terms sum guaranteed.' If the insured individual dies within the policy term, the sum guaranteed is the value which the life company has to pay to the nominee. The policyholder selects the sum assured at the date of acquisition.
- Nominee - The 'nominee' is the person (legal heir) named by the policyholder to whom the life insurance company would pay the sum promised and additional benefits in the event of an unfortunate occurrence. The nominee might be the policyholder's wife, kid, parents, or other family members. If the life guaranteed expires during the policy term, the nominee must file a claim for life insurance.
- Premium - The premium is the amount you pay each month to keep your life insurance policy current and covered. The insurance will terminate if you have been unable to fork out the money well before payment due date, even if you have a grace period. Regular payments, restricted payment terms, and single payments are all choices for paying the premium.
Due to the obvious multiple advantages it brings, including such life protection, financial security, and tax benefits, it is hard to ignore life insurance. As a result, you owe it to your loved ones to safeguard oneself against death and disability by purchasing life insurance. Why are we disregarding insurance when we require air, water, food, and shelter? Make life insurance their oxygen and give your family a break by insuring yourself.
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.