Glossary

Accident

An event or occurrence which is unforeseen and unintended usually resulting in a loss to a person or property.
Actuary

A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary determines the amount of money that must be contributed periodically to an insurance or pension fund in order to provide future insurance benefits.
Adverse Selection

The tendency of people who believe they have a greater-than-average likelihood of loss to apply for or continue insurance to a greater extent than do other people who have lesser-than-average likelihood of loss.
Age Limits

Stipulated minimum and maximum ages below and above which an insurance company may not accept applications or may not renew policies.
Agent

An Agent or Insurance Agent is a person licensed by IRDA to solicit or procure insurance business for an insurance company. An Agent usually identifies prospective insurance customers, assists them in deciding their insurance needs and in applying for insurance.
Annuitant

The person during whose life an annuity is payable, usually the person to receive the annuity.
Annuity

A policy under which an insurance company promises to make a series of periodic payments to the policy holder in exchange for a single premium or a series of premiums.
Application

A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application is the basis of the insurance contract when the policy is issued.
Assets

The things of value owned by a person, organization etc.
Assignment

Assignment is the transfer of rights in an insurance policy from one person to another. Sometimes, the term is also used to denote the document that evidences such assignment or transfer.
Assumptions

Conditions and rules underlying the calculation of a benefit, including expected interest, mortality and turnover.
Assurance

An agreement that guarantees the payment of a specified amount of money usually upon the death of the insured. In some cases, the benefits are payable in other circumstances specified in the agreement, such as total disability or critical illness etc. The term insurance and assurance are today generally accepted as synonymous, although not originally so. The term "assurance" is used more commonly in Canada and Great Britain than in the United States.
ADD-ONs

A supplementary benefit that becomes part of basic insurance contract and expands the scope of benefits available under a policy.

Cancellation

The discontinuance of an insurance policy before its date of maturity, either by the insured or the insurance company.
Cash Surrender Value

The amount of money the policyholder will receive, after necessary deductions, if he cancels the coverage and surrenders the policy to the insurance company. Usually, before a policy can acquire cash surrender value, specified minimum number of premiums shall have been paid.
Claim

A request for payment under the terms of an insurance policy on the happening of specified events or after the expiry of specified period.
Commission

A percentage of an insurance premium paid by the insurer to an insurance intermediary like an insurance agent or broker for selling insurance policies.
Compound reversionary bonus

The additional bonus earned by the accumulated bonus on a policy apart from the bonus on the basic Sum Assured.
Concealment

Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Conditions

The clauses inserted in an insurance contract that must be satisfied before the life insurance coverage becomes effective or before the insurer becomes liable to perform his part of the obligations under an insurance contract.
Coverage

The scope of protection provided under a contract of insurance; any of several risks covered by a policy.

Date of Policy Commencement

The date on which the policy was actually accepted and the initial deposit is converted to first premium. This is the date from which the insurance company accepts the risk on the life of the assured.
Death Benefit

The benefit (amount) that a designated beneficiary/nominee is eligible to receive, as per the insurance Policy, upon the death of the life assured. The benefit may include the original or basic policy death benefit, dividends, and supplemental benefits as reduced by any outstanding policy loans, loan interest, prior policy withdrawals etc. as applicable.
Declarations

Statements in an insurance contract that provide information about the property or life to be insured and which may be used for underwriting and rating purposes and identification of the property or life to be insured.
Disability Benefit

A feature added to some life insurance policies providing for waiver of premium, or payment of monthly income, or other benefits if the policyholder becomes totally and permanently disabled, as provided in the policy.
Dismemberment Insurance

A form of insurance that provides payment of certain benefits in case of dismemberment.
Disposable Personal Income

The personal income less personal tax and non-tax payments that is available for spending and saving is usually referred to as disposable personal income of a person.
Dread Disease Insurance

Insurance providing an unallocated benefit, subject to a maximum amount, for expenses incurred in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis and spinal meningitis, as provided in the policy.

Effective Date

The date on which the policy was actually accepted and the initial deposit is converted to first premium. This is the date from which the insurance company accepts the risk on the life of the assured.
Earned Income

Income earned by a person, be it salary, wages, commission or fees, out of any lawful economic activity.
Endorsement

An amendment to an insurance policy or a noting in the insurance policy that becomes part of the insurance contract. The endorsement usually expands or limits the benefits payable.
Endowment

A type of Life insurance wherein the sum assured is payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date.
Evidence of Insurability

Any statement or substance of a person?s physical condition and/or other factual information affecting his/her acceptance for insurance.
Exclusion

Conditions or circumstances expressly provided in the policy document for which the policy provides no benefits.
Exception

Conditions or circumstances expressly provided in the policy document for which the policy provides no benefits.

Medical Examination

The examination conducted by a qualified physician to determine the insurability of a life to be insured. A medical examination may also be used to determine whether a person claiming disability is actually disabled.
Mode of Payment

The method of making payments towards the risk covered under an insurance policy. For example, monthly, quarterly, half-yearly, and annually.
Moral Hazard

Moral Hazard is generally referred to as the risk on the life of a person due to the particular circumstances in which that life is placed; it could be simply due to the position (such as a politician), or by virtue of a person being involved in activities that are illegal or immoral or unhealthy in nature.
Mortality Table

A statistical table showing the death rate at each age, usually expressed as so many per thousand.

Proposal

A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application is the basis of the insurance contract when the policy is issued.
Paid-up Insurance

Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a non-forfeiture option, after the policy has acquired some cash value.
Participating Policy

Participating Policy is one that participates in the surplus of the insurance company.
Policy

The legal document issued by an insurance company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract or insurance policy.
Policy Holder

The person to whom a policy has been issued.
Policy Loan

A loan given by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
Policy Term

Period for which an insurance policy provides coverage. In some policies, the benefit becomes payable at the end of the Policy Term, if the specified event has not occurred.
Premium

The amount payable by the policyholder to the insurance company for effecting an insurance policy or keeping the same in force.
Premium Paying Period

Period for which the premium has to be paid in relation to a policy. The Premium Paying Period could be same or less than the Policy Term.