The terms in an insurance policy can seem confusing. So many terms that you probably have never heard before. So many documents to read.
Let’s make it simple. Here are the important terms you must know.
Basic Terms Everyone Should Know
Premium
This is the money you pay for your insurance policy. You can pay it yearly, half-yearly, or monthly.
Think of it as rent for your protection. Pay it on time, or your policy stops working.
Sum Assured
This is the money your family gets if something happens to you. Also called coverage amount.
For example, if your sum assured is 50 lakhs, your family receives 50 lakhs.
Policy Term
How long your insurance policy stays active. Could be 10 years, 20 years, or more.
After this period ends, your coverage stops unless you renew.
Policyholder
That’s you. The person who buys and owns the insurance policy.
Nominee
The person who will receive the money. Usually your spouse, parents, or children.
Choose your nominee carefully. Keep this information updated.
Important Coverage Terms
Death Benefit
The amount paid to your family when you pass away during the policy term.
This is the main reason people buy term life insurance.
Maturity Benefit
The best term life insurance in India focus on protection. Some policies, depending on the terms & the provider, give you money back when the term ends.
Rider
Extra benefits you can add to your basic insurance policy. Like toppings on a pizza.
Common riders include:
- Critical illness cover
- Accidental death benefit
- Disability cover
Each rider increases your premium but adds more protection.
Exclusions
Things your policy won’t cover. Very important to read this.
Common exclusions:
- Death within first year (sometimes)
- Suicide within first year
- Death due to dangerous activities
- Pre-existing conditions not disclosed
Medical and Health Terms
Pre-existing Disease
Any health problem you had before buying the policy. Like diabetes, blood pressure, or heart issues.
Always tell the truth about these. Hiding them can cancel your claim.
Medical Underwriting
The process where the company checks your health. They might ask for medical tests.
This decides if they’ll give you insurance and at what premium.
Waiting Period
Time you must wait before certain benefits start. Some critical illness riders have 90-day waiting periods.
Free Look Period
You get 15-30 days after buying to review your policy. Don’t like it? Return it and get your money back.
Use this time to read everything carefully.
Premium Related Terms
Premium Payment Term
How long you need to pay premiums. Sometimes it’s the same as policy term. Sometimes shorter.
Example: 30-year policy with 20-year payment term. You pay for only 20 years but stay protected for 30.
Regular Premium
You pay the same amount every year throughout the payment term.
Limited Premium
You pay for fewer years but get coverage for longer. Yearly premium is higher but you finish paying early.
Single Premium
Pay once and you’re done. Your policy stays active for the full term. But this needs a large amount upfront.
Grace Period
Extra time to pay your premium if you miss the due date. Usually 30 days.
Your policy stays active during this time. But pay quickly to avoid problems.
Claim Related Terms
Claim
When your nominee asks the company for the money after your death.
Claim Settlement Ratio
Very important number. Shows how many claims a company approves.
If the ratio is 98%, it means they approve 98 out of 100 claims. Higher is better.
When looking for the best term life insurance in India, always check this ratio.
Claim Settlement Time
How fast the company pays claims. Some pay within days. Others take weeks.
Faster is better for your family during difficult times.
Claim Rejection
When the company refuses to pay. Usually happens because of:
- Wrong information given while buying
- Death during exclusion period
- Documents not complete
Other Important Terms
Surrender Value
If you stop your policy early, this is what you might get back. Most term plans have no surrender value.
You lose everything if you stop paying.
Lapse
Your policy becomes inactive when you don’t pay premium even after grace period.
Your coverage stops. Your family gets nothing if something happens.
Revival
Bringing a lapsed policy back to life. You need to pay pending premiums plus interest. Might need medical tests again.
Bonus
Extra money added to your sum assured in some policies. The best term life insurance in India usually don’t have this. They keep it simple.
Paid-Up Value
If you stop paying premiums in some policies, you still get partial coverage. But this doesn’t apply to most term plans.
Before You Sign
Read the Policy Document
Not just the brochure. The actual policy document. It has all the real details.
Ask Questions
Don’t understand something? Ask until you do. Don’t feel shy or embarrassed.
Compare Properly
Use these terms to compare different insurance policy options. Don’t just look at premium.
Check Company Background
Look at their claim settlement ratio, customer reviews, and years in business.
Make an Informed Choice
Understanding these terms puts you in control. You know what you’re buying. You know what to expect.
The best term life insurance in India isn’t just about low premiums. It’s about clear terms, good coverage, and reliable claims.
Take time to learn. Take time to compare. Then decide what works for your family.
Your insurance policy is a promise to your loved ones. Make sure you understand every word of that promise.
