Products, policy terms and benefit mechanics in Indian life insurance, explained for people who sell, service or design them. This topic has 30 entries.
Life insuranceTerm 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.Life insuranceEndowment 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.Life insuranceMoney 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.Life insuranceWhole 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.Life insuranceULIP (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.Life insuranceAnnuityAn 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.Life insurancePension 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.Life insuranceGuaranteed 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.Life insuranceParticipating 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.Life insuranceReversionary 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.Life insuranceTerminal 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.Life insuranceSum 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.Life insuranceSingle 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.Life insurancePremium 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.Life insuranceMaturity 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.Life insuranceDeath 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.Life insuranceSurrender 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.Life insurancePaid-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.Life insuranceGrace 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.Life insurancePolicy 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.Life insuranceRidersRiders 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.Life insuranceWaiver 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.Life insuranceAccidental 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.Life insuranceKey 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.Life insuranceGroup 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.Life insuranceCredit 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.Life insuranceLoan 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.Life insuranceMortality 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.Life insuranceULIP 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.Life insuranceNAV 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.
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