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Insurance Encyclopedia (India)

196 terms across 13 topics, updated 17 October 2026

The Glotus456 Insurance Encyclopedia explains 196 concepts that people who make, sell and service insurance in India need to know: the regulators and laws, life, health, motor and commercial products, government schemes, distribution channels, the metrics distribution teams run on, insurance finance, reinsurance, claims and tax. Every entry gives a short definition first, explains how the concept works in India with links to the primary source, and adds what it means for distribution.

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Regulation and regulatorsThe laws, regulators, platforms and rules that shape how insurance is made, sold and serviced in India.21 terms Principles of insuranceThe legal and economic ideas every insurance contract in India rests on, from utmost good faith to subrogation.11 terms Life insuranceProducts, policy terms and benefit mechanics in Indian life insurance, explained for people who sell, service or design them.30 terms Health insuranceHow Indian health insurance policies are built: coverage terms, limits, waiting periods, claims and portability.26 terms Motor insuranceThird party and own damage cover, add-ons and the rules under the Motor Vehicles Act.11 terms Property, commercial and specialty insuranceFire, marine, engineering, liability, cyber, travel and home cover for businesses and households.14 terms Government and social insurance schemesCentral government insurance and pension schemes, and the rural and social obligations insurers carry.8 terms Distribution and intermediariesEvery channel that brings insurance to customers in India, from individual agents to banks, brokers and digital platforms.21 terms Distribution performance metricsThe numbers distribution leaders run on: persistency, activation, productivity, attrition and more.9 terms Insurance finance and actuarialHow insurers measure growth, profit and capital: premium measures, ratios, reserves, solvency and accounting.15 terms ReinsuranceHow insurers in India share risk with reinsurers, and the rules that govern cessions.7 terms Claims and policyholder serviceWhat happens after a policy is sold: claims, nominations, grievances, records and KYC.17 terms Insurance and taxIncome tax deductions, exemptions and GST as they apply to insurance in India.6 terms

A to Z

#A B C D E F G H I K L M N O P R S T U V W Z

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13th month persistency13th month persistency is the share of regular premium life policies, by premium or by count, that pay their first renewal premium, measured at the 13th month after issue.

A

Accidental death benefit riderAccidental death benefit rider is a life insurance add-on that pays an extra sum, over and above the base death benefit, if the life assured dies as a result of an accident.
Actuary and appointed actuaryAn actuary is a professional who measures financial risk using probability and statistics. Every Indian insurer must have an appointed actuary, approved by IRDAI, who signs off reserves and solvency.
Adverse selectionAdverse selection is the tendency of people who know they face higher risk to buy more insurance than others, so an insurer's pool ends up riskier than its prices assume.
Agency channelThe agency channel is an insurer's network of individual tied agents, organised under branches and sales managers, that recruits, trains and supports agents to sell and service policies.
Agent activationAgent activation is the share of an insurer's licensed agents or partner sellers who sold at least one policy in a period, showing how much of the sales force is actually productive.
Agent attritionAgent attrition is the rate at which insurance agents leave or are terminated from an insurer's rolls in a period, usually shown as terminations divided by the average number of agents.
Agent productivityAgent productivity is the new business an agent produces in a period, usually measured as policies (case rate) or annualised premium per active agent per month or year.
Agent recruitmentAgent recruitment is the process by which insurers and their managers find, select, train, test and appoint new insurance agents, and is judged by how many recruits go on to sell and stay.
Annualised premium equivalent (APE)Annualised premium equivalent (APE) is a life insurance sales measure equal to the annualised first year premium on regular premium policies plus 10% of single premiums written in a period.
AnnuityAn annuity is a contract with a life insurer that turns a lump sum or a series of premiums into a regular income, usually guaranteed for the rest of the annuitant's life.
Arogya SanjeevaniArogya Sanjeevani is IRDAI's standard individual health insurance policy, sold by general and health insurers under one name with uniform cover, so buyers compare only premium and service.
Assignment of a policyAssignment of a policy is the transfer of the policyholder's rights under an insurance policy to another person or lender, made under Section 38 of the Insurance Act, 1938 by endorsement or deed.
Atal Pension YojanaAtal Pension Yojana (APY) is a government-backed contributory pension scheme that guarantees a monthly pension of ₹1,000 to ₹5,000 from age 60 to subscribers who join between 18 and 40.
Average clause and under-insuranceThe average clause is a property insurance condition that reduces a claim in proportion to under-insurance when the sum insured is lower than the property's actual value at the time of loss.
Average ticket sizeAverage ticket size is the average premium per policy sold in a period. Indian life insurers disclose it for individual non-single premium policies in form L-22 each quarter.
AYUSH treatment coverAYUSH treatment cover is health insurance for hospital treatment under Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy, which IRDAI requires insurers to treat at par with other systems.
Ayushman Bharat PM-JAYAyushman Bharat PM-JAY is the Government of India's health assurance scheme giving eligible families cashless hospital cover of up to ₹5 lakh a year, extended in 2024 to everyone aged 70+.

B

BancassuranceBancassurance is the sale of insurance through a bank's branches, apps and customer base, with the bank registered with IRDAI as a corporate agent for one or more insurers.
Bharat Griha RakshaBharat Griha Raksha is IRDAI's standard home insurance product, in force since April 2021, that covers a home's building and contents against fire and allied perils with no under-insurance cut.
Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam SurakshaBharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha are IRDAI's standard fire policies for businesses with up to ₹5 crore and ₹5 crore to ₹50 crore at risk per location.
Bima BharosaBima Bharosa is IRDAI's online grievance management system, the renamed IGMS, where policyholders register and track complaints against insurers and IRDAI monitors how they are resolved.
Bima SugamBima Sugam is India's regulator-backed online insurance marketplace, set up under IRDAI's 2024 regulations as digital public infrastructure for buying, servicing and claiming on policies.
Bima TrinityBima Trinity is IRDAI's three-part plan to widen insurance access in India: the Bima Sugam marketplace, the Bima Vistaar bundled rural product and the Bima Vahak women-led field channel.
Bima VahakBima Vahak is an IRDAI-created, women-focused village distribution channel in which local individuals or entities sell and service Bima Vistaar and other simple covers for insurers.
Bima VistaarBima Vistaar is an IRDAI-backed bundled insurance product for rural and low-income households that combines life, personal accident, hospital cash and property cover in one simple, low-premium policy.

C

Cashless claimA cashless claim is a health insurance claim in which the insurer or its TPA pays the hospital directly for covered treatment, so the patient pays only non-covered items and policy deductions.
Channel mixChannel mix is the split of an insurer's new business premium across distribution channels such as individual agents, banks, other corporate agents, brokers, direct and online sales.
CKYC and KYC in insuranceKYC in insurance is the identity and address check insurers must run on every customer under anti-money laundering law. CKYC is the central registry that lets one verified record be reused.
Claim intimationClaim intimation is the first notice to an insurer that an insured event has happened, given by the policyholder, nominee or a channel, which starts the claim process and the settlement clock.
Claim repudiationClaim repudiation is an insurer's refusal to pay a claim, in full or in part, on grounds such as an exclusion, a breach of policy terms, non-disclosure or fraud, which it must explain in writing.
Claim settlement ratioClaim settlement ratio is the share of claims an insurer pays out of all the claims it had to decide in a year, reported for life insurers by number of death claims and by amount.
Co-paymentCo-payment is a cost-sharing clause in a health policy under which the policyholder pays a fixed percentage of every admissible claim, and the insurer pays the rest, up to the sum insured.
Combined ratioCombined ratio is a general insurer's claims ratio plus its expense ratio. Below 100% means an underwriting profit; above 100% means claims and costs exceed the premium earned.
Common Service Centres (CSC) in insuranceCommon Service Centres (CSCs) sell and service simple insurance in villages through village level entrepreneurs, under a government SPV registered with IRDAI under 2019 regulations.
Composite licenceA composite licence would let one insurance company sell life, general and health insurance together. As of October 2026, Indian law still does not allow it, so these lines run as separate companies.
Comprehensive motor insuranceComprehensive motor insurance is a package policy that combines compulsory third party liability cover with own damage cover for the insured vehicle, and can carry add-ons.
Compulsory personal accident coverCompulsory personal accident cover is the owner-driver accident cover attached to Indian motor policies, paying ₹15 lakh on death or permanent total disability in an accident.
ContributionContribution is the principle that when two or more indemnity policies cover the same loss, the insurers share the claim in proportion, and the insured cannot recover more than the actual loss.
Conversion ratioConversion ratio is the share of leads, meetings or proposals that turn into issued insurance policies, measured at each step of the sales funnel from first contact to policy issuance.
Corporate agentA corporate agent is a company, bank, NBFC or other entity registered with IRDAI to sell insurance through its certified staff, with tie-ups of up to nine insurers in each line.
Cost of acquisition per policyCost of acquisition per policy is the total spent to win one new insurance policy, including commission, sales staff, marketing, medicals and issuance costs, divided by policies issued.
Credit life insuranceCredit life insurance is life cover linked to a loan, which repays the outstanding loan to the lender if the borrower dies during the loan term, with any balance going to the family.
Critical illness insuranceCritical illness insurance is a benefit based health cover that pays a fixed lump sum when the insured is diagnosed with a listed serious illness, such as a specified cancer, whatever the bills.
Cyber insuranceCyber insurance covers the costs and liabilities that follow a cyber incident, such as a data breach, ransomware attack or online fraud, for businesses and, in India, increasingly for individuals.

D

Day care treatmentDay care treatment is a medical or surgical procedure done in a hospital or day care centre in less than 24 hours because of advances in technology, which health policies cover like an inpatient stay.
Death benefitDeath benefit is the amount a life insurer pays to the nominee or legal heirs when the life assured dies during the policy term, as defined in the policy document.
Death claimA death claim is the request to a life insurer to pay the death benefit after the life assured dies, made by the nominee, assignee or legal heirs and settled under IRDAI's claim timelines.
DeductibleA deductible in health insurance is a fixed amount of covered expenses the policyholder bears before the insurer pays, applied per claim, per year or both, and subtracted from larger claims.
Direct and digital channelThe direct and digital channel is insurance an insurer sells itself, through its own website, app, call centre or salaried staff, with no agent or intermediary and so no commission.
Directors and officers (D&O) insuranceDirectors and officers (D&O) insurance pays defence costs and damages when a company's directors and senior managers are personally sued or investigated over alleged wrongful acts.
Domiciliary hospitalisationDomiciliary hospitalisation is cover for treatment at home, on medical advice, for an illness that would normally need admission, when the patient cannot be moved or no bed is free.

E

Embedded valueEmbedded value is an actuarial measure of a life insurer's worth to shareholders: its adjusted net worth plus the present value of future profits from policies already in force.
Endowment policyAn endowment policy is a life insurance savings plan that pays the sum assured, plus any bonuses or guaranteed additions, on death during the term or on survival to the maturity date.
Engine protection coverEngine protection cover is a motor own damage add-on that pays for engine and gearbox damage from water ingress or oil leakage after an impact, which the base policy excludes.
Engineering insuranceEngineering insurance is a group of general insurance covers for construction and erection projects, machinery, boilers and electronic equipment, protecting against accidental damage and breakdown.
Expense ratioExpense ratio is an insurer's commission and operating expenses as a share of premium. In India it is tested against the IRDAI Expenses of Management limits for each insurer.
Expenses of Management (EoM) regulationsExpenses of Management (EoM) regulations are IRDAI's limits on what an insurer may spend on commission and operating costs, set as a share of premium under the 2024 EoM regulations.

F

Facultative reinsuranceFacultative reinsurance is reinsurance arranged for one specific risk at a time, which the insurer may choose to offer and the reinsurer may choose to accept, on terms set for that risk.
Family floater health insuranceA family floater is a health insurance policy in which one shared sum insured covers several family members, so any one member, or several together, can use the full cover in a policy year.
FDI in insuranceFDI in insurance is foreign direct investment in Indian insurers and intermediaries. As of October 2026, up to 100% is allowed under the automatic route, except LIC, where the limit is 20%.
Fire insuranceFire insurance is property cover that pays for physical loss or damage to buildings, machinery and stock caused by fire and named allied perils such as lightning, explosion, storm and flood.
Foreign reinsurance branches (FRBs)A foreign reinsurance branch (FRB) is an Indian branch of an overseas reinsurer, registered with IRDAI to write only reinsurance; Lloyd's operates in India on similar terms through Lloyd's India.
Free look periodThe free look period is the 30 days a buyer of a life or new individual health policy gets, from receiving the policy document, to review it and cancel for a refund without giving a reason.

G

General Insurance CouncilThe General Insurance Council is the statutory body of general, health and reinsurance companies in India under the Insurance Act, 1938. It sets conduct standards and publishes industry data.
GIC Re (General Insurance Corporation of India)GIC Re (General Insurance Corporation of India) is India's state-owned national reinsurer, headquartered in Mumbai, which receives the obligatory cession and leads most Indian reinsurance programmes.
Grace periodGrace period is the extra time after a premium due date during which a life policy stays in force without penalty: 15 days for monthly premiums and 30 days for other modes in India.
Grievance redressal in insuranceGrievance redressal in insurance is India's tiered route for policyholder complaints: the insurer's grievance officer, IRDAI's Bima Bharosa, the Insurance Ombudsman, then consumer courts.
Gross written premium (GWP)Gross written premium (GWP) is the total premium an insurer writes in a period before deducting reinsurance, covering new and renewal business and, for general insurers, reinsurance accepted.
Group health insuranceGroup health insurance is a single health policy issued to a master policyholder, usually an employer, that covers all members of a defined group, often with family members, under common terms.
Group term life insuranceGroup term life insurance is a single master policy that gives life cover to all members of a group, such as an employer's staff or an association's members, usually renewed every year.
GST on insuranceGST on insurance is the goods and services tax on premiums; since 22 September 2025 individual life and health policies are exempt, while group and general insurance stay at 18%.
Guaranteed return (non-par savings) planA guaranteed return plan is a non-participating life insurance savings policy whose maturity, income and death benefits are fixed in rupees at the start, so the payouts are known in advance.

H

Health insurance portability and migrationHealth insurance portability lets a policyholder move an indemnity health policy to another insurer at renewal, and migration to another plan of the same insurer, keeping waiting period credits.
Home insuranceHome insurance covers a house or flat and its contents against fire, natural disasters, burglary and similar risks, sold in India mainly through the standard Bharat Griha Raksha policy.

I

IBNR (incurred but not reported) reservesIBNR (incurred but not reported) reserves are amounts an insurer sets aside for claims from events that have already happened but have not yet been reported to it at the valuation date.
IC-38 and agent licensingIC-38 is the common name for the pre-recruitment exam and course that a person must pass, after insurer-run training, before an insurer can appoint them as an insurance agent in India.
IDV (insured declared value)IDV (insured declared value) is the sum insured under a motor own damage policy: the vehicle's listed selling price less age-based depreciation, and the most an insurer pays on theft or total loss.
Ind AS 117 and IFRS 17Ind AS 117 is India's accounting standard for insurance contracts, converged with IFRS 17. IRDAI made Ind AS applicable to insurers from 1 April 2026, with deferral for some to 2027-28.
Indemnity health insuranceIndemnity health insurance pays the actual medical expenses an insured person incurs on covered treatment, up to the sum insured and subject to policy limits, rather than a fixed amount.
Insurable interestInsurable interest is the financial stake a person must have in a life or property, so that its loss would harm them; without it an insurance contract is treated as a void wager.
Insurance Act, 1938The Insurance Act, 1938 is India's principal insurance law. It sets the rules on who may carry on insurance business, capital, investments, policyholder rights, agents, intermediaries and penalties.
Insurance agentAn insurance agent is an individual appointed by an insurer under Section 42 of the Insurance Act to solicit and service its policies, paid by commission and tied to one insurer per line.
Insurance brokerAn insurance broker is an IRDAI-registered firm that acts for the customer, compares and places cover with any insurer, and earns commission from insurers or fees for risk advice.
Insurance commissionInsurance commission is the payment an insurer makes to an agent or intermediary for selling and servicing a policy, set by insurers' board policies within IRDAI expense limits since 2023.
Insurance floatInsurance float is the money an insurer holds and invests between collecting premiums and paying claims, made up mainly of unearned premium and claims reserves.
Insurance for All by 2047Insurance for All by 2047 is IRDAI's goal that every Indian has suitable life, health and property cover and every enterprise has suitable insurance by India's 100th year of independence.
Insurance Information Bureau of India (IIB)The Insurance Information Bureau of India (IIB) is the IRDAI-promoted body that collects and analyses policy and claims data from all insurers for use in pricing, portability and regulatory work.
Insurance Institute of India (III)The Insurance Institute of India (III) is the Mumbai-based national body for insurance education, set up in 1955. It runs professional exams and the IRDAI pre-licensing tests for agents.
Insurance marketing firm (IMF)An insurance marketing firm (IMF) is an IRDAI-registered local distributor that sells retail insurance from up to six insurers per line, and other financial products, within chosen districts.
Insurance OmbudsmanThe Insurance Ombudsman is a free, out-of-court forum under the Insurance Ombudsman Rules, 2017 that decides policyholder complaints against insurers and intermediaries for amounts up to ₹50 lakh.
Insurance penetration and densityInsurance penetration is total insurance premium as a percentage of GDP; insurance density is premium per person. India's penetration was 3.7% and density USD 97 in 2024-25.
Insurance repository and e-insurance accountAn insurance repository is an IRDAI-registered entity that holds policies in electronic form in a free e-insurance account (eIA), so one account can store and service policies from many insurers.
Insurance web aggregatorAn insurance web aggregator is an IRDAI-registered company that runs a website comparing insurers' products, passes leads to insurers and can sell policies online or by phone.
InsurtechInsurtech is the use of technology to design, sell, price or service insurance, and the firms that do it, from digital brokers and aggregators to digital insurers and software providers.
IRDA Act, 1999The IRDA Act, 1999 is the law that created IRDAI as India's insurance regulator, set out its composition and powers, and opened the insurance sector to private and foreign-backed insurers.
IRDAI (Insurance Regulatory and Development Authority of India)IRDAI is the statutory regulator of insurance in India, set up under the IRDA Act, 1999, to protect policyholders and to regulate, promote and ensure the orderly growth of insurance.
IRDAI master circularsIRDAI master circulars are single documents that gather all of IRDAI's detailed instructions on one subject, such as health insurance or policyholder protection, under a principle-based regulation.

K

Key man insuranceKey man insurance is a life policy a business buys and pays for on the life of an employee, director or partner whose death would cause it financial loss, with the business as beneficiary.

L

Liability insuranceLiability insurance pays the compensation and defence costs a person or business owes third parties for injury, property damage or financial loss caused by its activities, products or advice.
Life Insurance Corporation of India (LIC)The Life Insurance Corporation of India (LIC) is India's largest life insurer, a statutory corporation formed in 1956, majority owned by the government and listed on stock exchanges since 2022.
Life Insurance CouncilThe Life Insurance Council is the statutory body of all life insurers in India, set up under the Insurance Act, 1938, that sets conduct standards, advises IRDAI and publishes industry data.
Loan against a life insurance policyA loan against a life insurance policy is a repayable loan the insurer gives on the security of a policy's surrender value, mandatory in non-linked savings plans under IRDAI's 2024 rules.
Loss minimisationLoss minimisation is the insured's duty to take reasonable steps to prevent a loss from getting worse once an insured event occurs, acting as a prudent uninsured person would.
Loss ratio and incurred claims ratioLoss ratio, called the incurred claims ratio (ICR) in IRDAI data, is a general or health insurer's net incurred claims divided by its net earned premium for a period.

M

Marine insuranceMarine insurance covers goods in transit by sea, air, rail or road (cargo) and ships and their liabilities (hull and P&I), governed in India by the Marine Insurance Act, 1963.
Married Women's Property Act policyAn MWP Act policy is a life policy a married man takes on his own life for his wife and children under Section 6 of the Married Women's Property Act, 1874, held in trust away from his creditors.
Maternity coverMaternity cover is a health insurance benefit that pays for childbirth and related care, usually after a waiting period in retail plans, within set limits for normal and caesarean delivery.
Maturity benefitMaturity benefit is the amount a life policy pays when the policyholder survives to the end of the term: the sum assured on maturity plus any bonuses, additions or fund value.
Maturity claimA maturity claim is the payout a life insurer makes when a policy completes its term with the life assured alive, due on the maturity date under IRDAI's 2024 servicing rules.
MDRT (Million Dollar Round Table)MDRT (Million Dollar Round Table) is a global association of life insurance and financial advisers; membership requires a high annual production threshold set in local currency for each country.
MicroinsuranceMicroinsurance is low-premium, low-cover insurance for low-income households, defined in India by the IRDAI (Insurance Products) Regulations, 2024 to include government schemes.
Mis-sellingMis-selling is selling an insurance policy that does not suit the buyer, or selling it on false, incomplete or pressured terms, such as forced bundling with a loan or misstated returns.
Money back policyA money back policy is an endowment-type life insurance plan that returns part of the sum assured at fixed intervals during the term as survival benefits, and pays the balance on maturity.
Moral hazardMoral hazard is the risk that having insurance changes a person's behaviour, making them less careful or more willing to claim, so that losses become more likely or larger than priced.
Moratorium period in health insuranceThe moratorium period is 60 continuous months of health cover after which the insurer cannot contest the policy or a claim for non-disclosure or misrepresentation, except for established fraud.
Mortality chargesMortality charges are the cost of life cover in a life insurance policy, shown explicitly in ULIPs as a monthly deduction of units based on age and the sum at risk.
Motor insurance service provider (MISP)A motor insurance service provider (MISP) is a vehicle dealer appointed by an insurer or intermediary to sell and service motor insurance for the vehicles it sells, under IRDAI's 2017 guidelines.
Motor Vehicles Act and insuranceThe Motor Vehicles Act, 1988 makes third party insurance compulsory for every vehicle used in a public place in India and sets the rules for accident compensation and claims.

N

NAV in ULIPsNAV in a ULIP is the net asset value, or price, of one unit of a segregated fund, worked out every day from the fund's assets less liabilities divided by the units outstanding.
Network hospitalNetwork hospital means a hospital or healthcare provider with a tie-up with a health insurer or its TPA to treat that insurer's policyholders on a cashless basis at agreed rates.
New business premium (NBP)New business premium (NBP) is the premium a life insurer collects from policies sold in a period: the first year premium on regular premium policies plus all single premiums.
No claim bonusNo claim bonus in health insurance is a reward for a claim-free policy year, given at renewal either as a cumulative increase in the sum insured or as a discount on the renewal premium.
No claim bonus in motor insuranceNo claim bonus in motor insurance is a 20% to 50% discount on the own damage premium for claim-free years; it belongs to the policyholder and can move to a new vehicle or insurer.
NominationNomination is the policyholder's choice of one or more people to receive the policy money on their death, made under Section 39 of the Insurance Act, 1938 and now required on every life proposal.
Nominee vs legal heirNominee vs legal heir is the gap between the person an insurer pays on a policyholder's death and the people who own the money under succession law, decided in life insurance by Section 39(7).

O

Obligatory cessionObligatory cession is the share of every general insurance policy that Indian insurers must reinsure with an Indian reinsurer by law; for 2026-27 it is 4% of the sum insured, all ceded to GIC Re.
OPD coverOPD cover is health insurance for outpatient care that does not need hospital admission, such as doctor consultations, diagnostic tests, medicines and dental or vision care, within a set annual limit.
Open architecture in bancassuranceOpen architecture in bancassurance lets a bank or other corporate agent sell products of several insurers in each line, up to nine per line in India since 2022, instead of one partner.
Own damage insuranceOwn damage insurance is the part of a motor policy that pays for loss of or damage to the insured's own vehicle from accident, theft, fire or calamity, up to its insured declared value.

P

Paid-up valuePaid-up value is the reduced sum assured a life policy keeps when premiums stop after it has acquired a surrender value, worked out in proportion to the premiums actually paid.
Parametric insuranceParametric insurance pays a pre-agreed amount when a measurable event crosses a set threshold, such as rainfall, temperature or wind speed, instead of paying on an assessment of the actual loss.
Participating and non-participating policiesA participating (par) life policy shares in the surplus of the insurer's par fund through bonuses, while a non-participating (non-par) policy pays only the benefits fixed in its contract.
Pay as you drive and pay how you drivePay as you drive and pay how you drive are usage-based motor covers in which the own damage premium depends on kilometres driven or on measured driving behaviour.
Pension planA pension plan from a life insurer is a savings policy that builds a retirement corpus during a deferment period and, at vesting, turns most of it into an annuity, with part paid as a lump sum.
Persistency ratioPersistency ratio is the share of life insurance policies, or of their premium, that are still paying renewal premiums at set points after sale, such as the 13th and 61st month.
PMFBY (Pradhan Mantri Fasal Bima Yojana)PMFBY is India's flagship crop insurance scheme, launched in Kharif 2016, covering farmers' yield losses from natural risks for a farmer premium capped at 1.5 to 5 per cent.
PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana)PMJJBY is the Government of India's one-year renewable group term life scheme that pays ₹2 lakh on death from any cause, for bank and post office account holders aged 18 to 50, at ₹436 a year.
PMSBY (Pradhan Mantri Suraksha Bima Yojana)PMSBY is the Government of India's one-year renewable accident insurance scheme that pays up to ₹2 lakh for accidental death or disability, for account holders aged 18 to 70, at ₹20 a year.
Policy revival and lapsePolicy revival is restoring a life policy that lapsed or was discontinued for unpaid premium, by paying arrears within the revival period: five years for non-linked plans and three for ULIPs.
POSP (point of sales person)A POSP (point of sales person) is an individual, at least 18 and Class 10 pass, who after 15 hours of training sells simple pre-approved insurance products for one insurer or intermediary.
Pre and post hospitalisation expensesPre and post hospitalisation expenses are medical costs for the same condition in a fixed number of days before admission and after discharge, which a health policy pays alongside the hospital claim.
Pre-existing diseaseA pre-existing disease (PED) is a condition diagnosed, or for which medical advice or treatment was recommended or received, within 36 months before a health policy starts.
Premium paying term and policy termPremium paying term is the number of years premiums must be paid on a life policy; policy term is the full period the cover and benefits run, which can equal or exceed the paying term.
Principle of indemnityThe principle of indemnity says insurance should restore the insured to the financial position they were in just before a loss, no better and no worse, so no one profits from a claim.
Professional indemnity insuranceProfessional indemnity insurance covers professionals and firms against claims that negligent advice, an error or an omission in their work caused a client financial loss.
Protection of policyholders' interests regulationsThe protection of policyholders' interests regulations are IRDAI's 2024 rules on how insurers and distributors sell, issue and service policies, covering free look, claim timelines and grievances.
Proximate causeProximate cause (causa proxima) is the dominant, effective cause of a loss; an insurer pays only when that cause is an insured peril and not an excluded one.
Public sector general insurersPublic sector general insurers are the government-owned non-life insurers in India: New India Assurance, United India, Oriental and National Insurance, plus specialised insurers such as AIC and ECGC.

R

Reimbursement claimA reimbursement claim is a health insurance claim in which the policyholder pays the hospital first and the insurer later repays the admissible amount, due within 15 days under IRDAI rules.
ReinsuranceReinsurance is insurance bought by insurers: an insurer passes part of the risks it has written to a reinsurer, which shares the claims in return for a share of the premium.
Restoration benefitRestoration benefit is a health insurance feature that refills the sum insured, fully or partly, after claims use it up within a policy year, so that later hospitalisations stay covered.
RetrocessionRetrocession is reinsurance bought by a reinsurer: it passes part of the risks it has accepted from insurers to other reinsurers, called retrocessionaires, to limit its own exposure.
Return to invoice coverReturn to invoice cover is a motor own damage add-on that, on theft or total loss, pays the gap between the vehicle's insured declared value and its original invoice price.
Reversionary bonusA reversionary bonus is the annual bonus a life insurer adds to a participating policy out of its par fund surplus; once declared it is guaranteed and paid with the sum assured on death or maturity.
RidersRiders are optional add-on covers attached to a base life insurance policy for an extra premium or charge, such as accidental death, critical illness or waiver of premium, within IRDAI limits.
Risk based capital (RBC)Risk based capital (RBC) is a solvency regime in which an insurer's required capital is set by the risks it actually carries. IRDAI is preparing an Indian RBC framework to replace the 150% rule.
Risk pooling and the law of large numbersRisk pooling is the combining of many similar, independent risks so that the losses of a few are paid from the premiums of all; the law of large numbers makes those losses predictable.
Rural and social sector obligationsRural and social sector obligations are IRDAI's mandatory targets requiring every insurer to cover a minimum share of lives and assets in allocated gram panchayats and vulnerable groups.

S

Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 amended India's three main insurance laws, allowing 100% foreign investment in insurers and widening IRDAI's powers.
SalvageSalvage is the value left in damaged insured property after a loss, such as a wrecked car or fire-damaged stock, which is deducted from the claim or taken over by the insurer after payment.
Section 10(10D)Section 10(10D) of the Income-tax Act, 1961 exempts life insurance maturity, surrender and death proceeds, subject to premium limits; since April 2026 it sits in Schedule II of the 2025 Act.
Section 45 of the Insurance Act, 1938Section 45 of the Insurance Act, 1938 bars a life insurer from questioning a policy on any ground once three years have passed from issue, risk start, revival or rider date, whichever is later.
Section 80C and life insuranceSection 80C of the Income-tax Act, 1961 allows a deduction of up to ₹1.5 lakh a year for life insurance premiums and other savings; since April 2026 it is section 123 of the 2025 Act.
Section 80D and health insuranceSection 80D of the Income-tax Act, 1961 allows a deduction for health insurance premiums for self, family and parents, up to ₹25,000 or ₹50,000 each; it is now section 126 of the 2025 Act.
Senior citizen health insuranceSenior citizen health insurance is cover for people aged 60 and above, now shaped by IRDAI rules on open entry ages, capped premium increases and a separate claims channel.
Single premium policyA single premium policy is a life insurance contract paid for with one lump-sum premium at the start, after which cover and benefits continue for the full term with no further payments due.
Solvency ratio and solvency marginSolvency ratio is an insurer's available solvency margin divided by its required solvency margin. IRDAI requires every insurer to stay above a control level of 150% at all times.
Standalone health insurerA standalone health insurer (SAHI) is an IRDAI-registered insurer licensed only for health insurance business, which includes personal accident and travel cover, but not motor, fire or life.
Standard Fire and Special Perils policyThe Standard Fire and Special Perils (SFSP) policy is India's long-standing fire wording that covers property against fire and a fixed list of named perils, now used mainly for risks above ₹50 crore.
Sub-limits and room rent limitsSub-limits are caps inside a health policy on what the insurer pays for a specific item, illness or procedure, such as room rent per day or cataract surgery, even if sum insured remains.
SubrogationSubrogation is the insurer's right, after paying a claim, to step into the insured's shoes and recover the amount from the third party who caused the loss, up to what it paid.
Sum assuredSum assured is the guaranteed amount a life insurance policy promises to pay on a covered event such as death or maturity, fixed in the contract before any bonuses or additions.
Surrender valueSurrender value is the amount a life insurer pays when a policyholder ends a policy before maturity, set as the higher of the guaranteed and special surrender values under IRDAI rules.
Surveyor and loss assessorA surveyor and loss assessor is an IRDAI-registered professional who inspects a general insurance loss, checks its cause against the policy and assesses the amount payable under Section 64UM.

T

Taxation of ULIPsTaxation of ULIPs covers the premium deduction, tax-free maturity and death proceeds within premium limits, capital gains tax on high-premium ULIPs, and the 2025 GST exemption.
TDS on insurance payouts (Section 194DA)TDS on insurance payouts under section 194DA is the 2% tax an insurer deducts from the income part of a taxable life insurance payout; since April 2026 the rule sits in section 393(1) of the 2025 Act.
Term insuranceTerm insurance is a pure protection life policy that pays a fixed sum assured to the nominee if the insured person dies within the policy term, and pays nothing if the person survives it.
Terminal bonusA terminal bonus is a one-time bonus a life insurer may pay on a participating policy when it ends by maturity or death, reflecting the policy's final share of the par fund surplus.
Third party motor insuranceThird party motor insurance is the cover every vehicle on a public road in India must carry under the Motor Vehicles Act, 1988, paying for death, injury or damage caused to others.
Tier 2 and Tier 3 insurance distributionTier 2 and Tier 3 insurance distribution is selling and servicing insurance in India's smaller cities, towns and rural areas, where penetration is low and costs per policy run higher.
Top up and super top up health insuranceTop up and super top up health insurance are indemnity policies that pay hospital bills only above a set threshold, the deductible, giving high cover for less than a bigger base policy.
TPA (third party administrator)TPA (third party administrator) is the term for an IRDAI-registered company that services health insurance claims for insurers, handling cashless approvals and claim processing.
Travel insuranceTravel insurance covers medical emergencies, trip disruption and losses such as baggage or passport loss during a journey, sold in India mainly as overseas cover with domestic variants.
Treaty reinsuranceTreaty reinsurance is a standing agreement, usually renewed yearly, under which a reinsurer automatically accepts an agreed share of a whole class of an insurer's policies on pre-set terms.

U

ULIP (unit linked insurance plan)A ULIP (unit linked insurance plan) is a life insurance policy that invests premiums, net of charges, in market-linked funds chosen by the policyholder, and also pays a death benefit.
ULIP chargesULIP charges are the fees a unit linked plan deducts from premiums or the fund, such as premium allocation, fund management, administration and mortality charges, each capped by IRDAI.
UnderwritingUnderwriting is the insurer's process of assessing a proposal's risk and deciding whether to accept it, on what terms and at what premium, following a board-approved underwriting policy.
Use and file product approvalUse and file is IRDAI's product approval route under which an insurer launches a product after its own board committee approves it and a UIN is assigned, without filing with IRDAI first.
Utmost good faith (uberrimae fidei)Utmost good faith (uberrimae fidei) is the rule that both insurer and proposer must honestly disclose every material fact before an insurance contract is made, or the contract can be avoided.

V

Value of new business (VNB) and VNB marginValue of new business (VNB) is the present value of future profits expected from life policies sold in a period, after the cost of capital. VNB margin is VNB divided by APE.

W

Waiting period in health insuranceA waiting period is the time after a health policy starts when some claims are not paid: an initial period, specific periods for listed conditions, and one for pre-existing diseases.
Waiver of premium riderWaiver of premium rider is an add-on that cancels a life policy's future premiums if the life assured or payer dies, is disabled or gets a covered illness, while benefits continue.
Whole life insuranceWhole life insurance is a life policy that covers the insured for life, or until a very advanced age such as 99 or 100, and pays the sum assured plus any bonuses whenever death occurs.
Women in insurance distributionWomen in insurance distribution means women working as agents, POSPs, Bima Vahaks and sales staff; they were about 29% of India's life insurance agents in 2022, a share schemes now aim to raise.

Z

Zero depreciation coverZero depreciation cover is a motor own damage add-on that removes the depreciation deducted on replaced parts in a partial loss claim, so the insurer pays the full cost of parts.