dictionary of life insurance terminolgy

8/20/2019 Dictionary of Life Insurance Terminolgy

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ULIPS

ASSIG

NEE

SW

ITCHIN

G

FUND VAL

UE

NOMINAT

IONRID

ERS

SUM ASSURED

GRACE PERIOD

ANNUITY

DICTIONARY OFLIFE INSURANCE TERMINOLOGY

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Glossaryof Terms

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Absolute AssignmentAccidentAccidental BenefitAccidental Death BenefitAccidental Death Benefit andDismembermentAccidental Death Benefit Linked Rider

Accumulation PeriodActuarial Cost AssumptionsActuarial Cost MethodAdjustable Life InsuranceAge at EntryAge at MaturityAge LimitsAnnual Premium AnnuityAnnual Premium Payment ModeAnnualised Premium

AnnuitantAnnuity (Retirement Option or LifeAnnuity)

GLOSSARY OF TERMS (please click on the term to view its meaning)

TERM

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AssigneeAssignmentAssignorBalanced Fund and BalancedPension FundBancassuranceBeneficiary

Bond Fund and Bond Pension FundBrokerCertified Insurance Facilitator (CIF)Child PlansClaimClaim AmountCommissionConcealmentConditional AssignmentContract

CoverageCPPI (Constant Proportion PortfolioInsurance)Criti Care 13 Rider

TERM

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Critical IllnessCritical Illness InsuranceCritical Illness RiderDaily Protect FundDate of CommencementDeath BenefitDeath Claim

Declaration of Good Health (DGH)Decreasing Sum AssuredDeferment DateDeferment PeriodDeferred AnnuityDiscontinuance Charges (SurrenderCharges)Discontinuance of PremiumDiscontinued Policy FundDoctrine of Utmost Good Faith

Electronic Clearing SystemElectronic Fund TransferEndowment PlansEquity Elite Fund

TERM


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TERM

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Guaranteed Interest RateGuaranteed Returns PlansGuaranteed Surrender ValueGuaranteed Survival BenefitsHazardous OccupationHealth Insurance PlansImmediate Annuity

Income Sustainer RiderIncreasing Sum AssuredIncreasing Term InsuranceIndemnityIndex Fund and Index Pension FundIn-force PolicyInsurabilityInsurable InterestInsurable RiskInsurance Advisor (Agent)

Insurance Policy Document (PolicyDocument)InsurerInterim Interest Rate

TERM

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Investment RiskIRDA (Insurance Regulatory andDevelopment Authority)Joint and Survivor Annuity (JointAnnuity Plans)Joint Life Insurance PlansKey Employee or Keyman

LapseLapsed PoliciesLife Annuity (Annuity)Life Assured (Insured)Life ExpectancyLife InsuranceLimited Payment Whole Life PlanLimited Premium Payment TermLock-in Period (Surrender Period)Loyalty Addition/ Guaranteed

AdditionMaterial FactMaturity BenefitsMaturity Date

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Equity FundEquity Optimiser Fund and EquityOptimiser Pension FundExclusionsEx-gratia ClaimExpense RatioFamily History

Financial UnderwritingFirst Unpaid Premium (FUP)Fixed AnnuityFraudFree Look PeriodFund Management ChargesFund ValueGrace PeriodGross PremiumGroup Gratuity Scheme

Group Life InsuranceGrowth Fund and Growth PensionFundGuaranteed Addition/ LoyaltyAddition


TERM

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Medical UnderwritingMinor LivesMisrepresentationMode based Mortality RateMoney Back PlansMoney Market Fund and MoneyMarket Pension Fund

Moral HazardMorbidity RateMortality ChargesNAV Guarantee PlansNet Asset Value (NAV)NominationNomineeNon DisclosureNon-Medical CasesNon-Participating Policies

Non-Standard LifeOccupational HazardsOmbudsmanP/E Managed Fund


TERM

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Paid Up PolicyPaid Up ValuePartial DisabilityPartial Withdrawal ChargesPartial WithdrawalsParticipating PoliciesPayment Instrument Collection

ChargePension Plans or Annuity PlansPermanent DisabilityPersistencyPolicy AccountPolicy Administration ChargesPolicy Anniversary DatePolicy Document (Insurance PolicyDocument)Policy Premium Component

Policy RevivalPolicy TermPolicyholderPolitically Exposed Person (PEP)

TERM

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Premature DeathPremiumPremium Allocation ChargesPremium Frequency (PremiumPeriodicity)Premium HolidayPremium Payment Term

Premium Payor Waiver BenefitRiderPremium Periodicity (PremiumFrequency)Premium Waiver BenefitsPrimary BeneficiaryProposal FormProposerProtection Plans (Term Plans / TermInsurance)

RebatesRedirection (Premium Redirection)Regular PremiumReinstatement

TERM





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Renewal PremiumReturn Guarantee FundRevival PeriodRidersRisk AssessmentRisk Premium ComponentSavings Plans

Service Tax DeductionsSettlement OptionSingle PremiumStandard LifeStandard RiskStanding InstructionsSubrogationSub-Standard LifeSuicide ExclusionSum Assured

Sum Assured Multiplier Factor(SAMF)SuperannuationSurcharge


TERM

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SurrenderSurrender Charges (DiscontinuanceCharges)Surrender Period (Lock-in Period)Surrender ValueSurvival BenefitsSwitching

Switching charges (Fund SwitchingCharges)TermTerm Insurance (Protection Plans /Term Plans)Terminal Interest RateThird Party AdministratorTop-UpTop 300 Fund and Top 300 PensionFund

Total Permanent DisabilityTraditional Life Insurance PlanUnderwritingUnit

TERM

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Unit Linked Life Insurance Plans(ULIPS)Unit Price (Unit Value)Variable Insurance PlansVested BonusVesting AgeVoid Contract

Waiting PeriodWaiverWhole Life Insurance PolicyWith ProfitWithout Profit

TERM





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AAbsolute Assignment

Accident

Accidental Benefit

Accidental Death Benefit

Absolute Assignment means complete transferof whole and sole rights of the policy from theassignor to the assignee without any furtherterms and conditions applicable.

It is an unforeseen and unintended event/occurrence that has caused an injury to theinsured.

A benefit that provides for payment of anadditional benefit equal to the Accidental Benefitsum assured in installments or in lump sum dueto an occurrence of a specified event.

In the event of death of the life assured arising asa result of an accident during the term of the lifeinsurance policy, the additional amountmentioned under this benefit that is paid to thenominee is called Accidental Death Benefit.

Accidental Death Benefit andDismemberment

Accidental Death Benefit Linked Rider

Accumulation Period

It is a supplementary benefit that provides anamount in addition to the policy’s basic deathbenefit. This additional amount is payable if theinsured dies or loses any two limbs or sight ofboth eyes as a result of an accident.

Under this rider, if the life assured dies due to anaccident within the term of the Unit Linked LifeInsurance Policy, the nominee receives anadditional amount as mentioned under thisbenefit. (SBI Life - Accidental Death BenefitLinked Rider, UIN: 111A019V01)

The life period of an annuity is divided into twophases: the accumulation phase and the incomephase. The accumulation phase (also called asdeferment period) is the time during which theannuitant has not started receiving pension fromthe annuity. During the accumulation phase, theannuitant pays periodic premiums into theannuity and the annuity accrues interest.

LIFEINSURANCEtips

Get insured at a

young age, when premium

is low and ensure

a secure future for you

and your family.





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AThe Benefit Approach finds the present value offuture benefits by discounting them.

As per the changing insurance needs of apolicyholder, a form of life insurance that allowsthe policyholder to vary the type of insurance

cover provided by the policy. It allows thepolicyholder to alter the period of protection,increase or decrease the sum assured, increase ordecrease the premium amount and change theduration of the premium payment period.

It is the proposer’s or life insured’s age at the timeof filling the proposal form or entering into acontract.

It is the proposer’s or l ife insured’s age when thepolicy matures or the contract comes to an end.

Adjustable Life Insurance

Age at Entry

Age at Maturity

Age Limits

Annual Premium Annuity

Annual Premium Payment Mode

Annualised Premium

Stipulated minimum and maximum age limits asstated by the insurance company. Based on theage limit, the insurance company will accept/reject applications or renew policies.

It is an annuity whose purchase price is paid inannual installments.

When the policyholder chooses to pay thepremium amount once in a year, the modechosen is called Annual Premium Payment Modeand the premium amount is called AnnualPremium.

The total amount of premium paid within 12policy months.

For example, if the policyholder has chosen thequarterly payment mode with premium amount

Actuarial Cost Assumptions

Actuarial Cost Method

The assumptions an actuary makes whencalculating the cost of providing insurance or apension. Actuarial cost assumptions include theexpected benefit of the insurance policy orpension policy. Assumptions are about rates ofinvestment earnings, mortality, turnover,

probable expenses, and distribution or actualage at which employees are likely to retire.

A method used by actuaries to calculate theamount a company must pay periodically tocover its pension expenses.

The two main methods used are the CostApproach and the Benefit Approach.

The Cost Approach calculates total final benefitsbased on several assumptions, including the rateof wage increase and when employee will retire.The amount of funding that will be needed tomeet those future benefits is then determined.





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AThere are two basic types of Annuities:a. Deferred Annuity: In deferred annuity, there

is usually an accumulation phase ordeferment period which is till the vesting age,during which time the annuitant has to paypremiums. A corpus is accumulated duringthis period which is used at the time ofvesting to buy an annuity of choice. Thepension or annuity begins from the vestingage in the annuity mode chosen.

b. Immediate Annuity: The proposer has tomake a lump sum payment of singlepremium for an annuity which startsimmediately in one year/ six months/ threemonths or one month after payment ofpremium, depending upon the annuity modeselected.

The person to whom the rights of the policy arebeing transferred by the policyholder (assignor) iscalled the Assignee.

Assignee

Assignment

Assignor

Assignment means legal transference. It is ameans whereby the beneficial interest, right andtitle under a life insurance policy get transferredfrom assignor to assignee.

‘Assignor’ is the policyholder who transfers the

title and ‘Assignee’ is the person who derives thetitle from the assignor.

The person who transfers the rights of the lifeinsurance policy to the assignee is called theAssignor.

of ` 10,000, then the Annualised Premium willbe ` 40,000.

Note: Except for annual premium paymentmode, the Annualised Premium is always greaterthan the annual premium because of increasedadministrative costs. For annual premium

payment mode policies, the Annualised Premiumis always equal to the annual premium.

The person receiving annuity benefits from anannuity contract at fixed intervals of time (thiscan be on a yearly/ half yearly/ quarterly ormonthly basis and based on the annuity optionselected) is called as Annuitant.

An agreement by an insurer to make periodicpayments that continue during the survival of theannuitant(s), till death or for a specified period.Annuities are paid in different ways, for example,Annuity for Life, Joint Life Annuity, Annuity withreturn of corpus, etc.

Annuitant

Annuity (Retirement Option or Life Annuity)





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BBalanced Fund and Balanced Pension Fund

Bancassurance

Beneficiary

The objective of these funds is to provide anaccumulation of income through investments inboth Equities and Fixed Income Securities with anattempt to maintain a suitable balance betweenreturn and safety.

It refers to the sale of insurance products throughBank's distribution channels. The Bancassurancemodel was first originated in France in 1980.

A beneficiary in the broadest sense is a person ora legal entity which receives money or otherbenefits from a benefactor. For example: Thebeneficiary of a life insurance policy is the personwho receives the payment of the amount of

insurance after the death of the insured.

Bond Fund and Bond Pension Fund

Broker

The objective of these funds is to providerelatively a safe and less volatile investmentoption mainly through debt instruments andaccumulation of income through investments inFixed Income Securities.

Insurance brokers were introduced in IndianInsurance Industry by the IRDA as professionalswho represent and service the interests ofinsurance buyers, although the broker isremunerated by the insurance company. Theycan sell the products of multiple life insurancecompanies. They have the advantage of beingable to compare the insurance products ofvarious insurance companies and then offer aplan that best suits the requirements of the

insurance buyer.

Solutions for Life -Simple & Smart

Protection Plans | Savings PlansWealth Creation Plans | Child Plans | Pension Plans

Health Insurance Plans

SMS: ‘CELEBRATE’ to 56161Toll Free: 1800 22 9090

Visit Us at: www.sbilife.co.inEmail: [email protected]





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CCertified Insurance Facilitator (CIF)

Child Plans

CIFs are bank employees who can providequalified insurance advice to customers and helpthem in making a well informed decision andchoose the right life insurance productconsidering their long term financial needs andgoals.

Child Plans are life insurance plans that protect achild’s future by providing financial support forthe child’s higher education, marriage, etc., incase anything unforeseen happens to the parent.In other words, these types of policies are takenon the life of the parent/ children for the benefitof the child. With Child Plans, the parent canplan to get funds at important life stages of thechild. Some insurers offer waiver of premiums in

case of unfortunate death of the parent/proposer during the term of the policy.

Claim

Claim Amount

Commission

Concealment

It is a request for payment by the beneficiary ornominee or legal heir of a life insurance policy tothe insurer as per the terms and conditions of thepolicy.

It is the amount which the beneficiary ornominee or legal heir claims from the insurerincase anything unforeseen happens to the lifeassured.

Fee paid to the life insurance agent or insurancesalesperson as a percentage of the policypremium.

At the time of getting into the life insurancecontract, the act by the proposer or life insured ofpurposefully not revealing information thatwould affect the issuance or premium amount ofan insurance contract.

LIFEINSURANCEtips

Understand your risk

appetite: Identify a plan

that suits your risk appetite

in terms of fund allocation

between equity and

debt instruments.





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CCPPI (Constant Proportion PortfolioInsurance)

Criti Care 13 Rider

An investment strategy that sets a minimumvalue on a portfolio by investing in high riskinstruments (equity) and low risk instruments(bonds or government securities) such that if thelow risk instrument falls to its lowest expected

value, the portfolio will be at it’s minimum value,which was set earlier. The asset mix is altered asthe asset values change. This limits the downsiderisk while maintaining a potential upside throughthe exposure to the high risk instruments.

Criti Care 13 Rider provides protection against 13critical illnesses which includes cancer, coronaryartery bypass graft surgery, heart attack, heartvalve surgery, kidney failure, major burns, major

organ transplant, paralysis, stroke, surgery ofaorta, coma, motor neuron disease and multiplesclerosis. (SBI Life - Criti Care 13 Rider, UIN:111A018V01)

Critical Illness

Critical Illness Insurance

Critical Illness Rider

Critical Illnesses are classified as those illnessesthat even after treatment (if at all), alters thelifestyle of a person drastically. Every insurer has adifferent list of what it considers as Critical Illness.One can purchase ‘Critical Illness’ Rider as anadditional cover to take care of major illnesses.

It is a type of individual health insurance that paysa lump sum benefit when the insured isdiagnosed with a specified illness. It is alsoknown as Critical Diagnosis Insurance.

As per this rider, in the event of the diagnosis of acritical illness during the term of the policy, anamount equal to or less than the sum assured is

payable to the insured. However, the diagnosedillness must be within the purview of the definedcategories of critical illnesses by the li fe insurancecompany.

Conditional Assignment

Contract

Coverage

Conditional Assignment means transfer of rightsof the policy from the Assignor to the Assigneesubject to fulfillment of certain conditions. It isonly done for a certain time duration. Once theconditions are fulfilled, the policy automaticallygets transferred back to the original owner, i.e.

the assignor.

A ‘Contract’ is an agreement between two ormore entities which creates a legal obligation todo or not do a particular action.

The scope of protection provided under acontract of insurance; several risks covered by apolicy.





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CInsurers often have a maximum limit for this riderand a clause that states that benefits will be paidonly if the disease has occurred after six or twelvemonths of commencement of the policy.

If a claim is made under the rider, usually thebenefit terminates and hence, no subsequent

premiums are charged for this rider. Somepolicies specify that if the insured dies within twoor three months of claiming the sum underCritical Illness Benefit Rider, the sum paid underthe rider will be deducted from the deathbenefit.

10 most important things you should do before signinga proposal form.

Have you?

Analysed and ensured that the planmeets your insurance needs and long

term financial goals.

1 6Checked the benefit Illustration.

Checked the plan type. Is it MarketLinked or Traditional.2 7 Confirmed the tenure of the plan.Made sure it is appropriate.Understood the risk factors, termsand conditions of the plan. Readthe sales brochure carefully.3 8

Understood the benefits available underthe plan – before and at Maturity.

Checked whether it is a Single

or Regular Premium Plan.

4 9Checked the Lock-in period and

applicable Surrender Charges.

Confirmed the Premium Amountand the Premium Paying Term.5 10 Provided true and completeinformation in the proposal form.





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DDaily Protect Fund

Date of Commencement

Death Benefit

Death Claim

The objective of this fund is to provide NAV (NetAsset Value) protection using the CPPImethodology. The Asset Allocation isdynamically re-balanced to give a guarantee of105% of the highest NAV in the built-up phase.

It is the date on which the insurance riskcommences.

Policy (Life Insurance) proceeds paid to thenominee or the beneficiary on account of deathof the life insured.

It is a request by the nominee of a life insurance

policy to the insurer for the payment, as per theterms of the policy, on the death of the lifeassured.

Declaration of Good Health (DGH)

Decreasing Sum Assured

It is the declaration by the policyholder about his/her good health and that he/ she does not sufferfrom any disability or incapacity. Also, it isconfirmed by the policyholder that he/ she is notunder treatment for any illness or exposed tooccupational hazards that can possibly cause a

policy relapse. It confirms that the policyholderhas not received any medical treatment recently.Please note: Any reticence or intentional falsedeclaration which may change the risk ordiminish its assessment for the insurers shallresult in the cancellation of cover. In such cases,premiums will not be paid back.

Decreasing Sum Assured means that the sumassured of the policy decreases every year to a

zero balance at the end of the term. This type ofsum assured is useful when the life assured needsprotection the most during the initial years of thepolicy. It can also be used as a means ofprotecting a mortgage.

Benefits of Staying Invested throughoutthe Policy Term

Life Insurance Cover and FinancialSecurity for your family

Good Things come to thosewho wait. STAY INVESTED


Meet your future Financial Goals

Reduced Risks and OptimisedReturns

Reduced Charges as the term

progresses

Tax Benefits




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DDiscontinuance Charges (SurrenderCharges)

Discontinuance of Premium

Discontinued Policy Fund

These charges are also known as SurrenderCharges. These charges are deducted from thepolicyholder’s cash value if the life insurancepolicy is surrendered (terminated) by thepolicyholder during the surrender period. The

policyholder should always check the surrendercharges and surrender period while evaluating alife insurance plan.

When a policyholder is not able to pay premiumon due dates, it is called as Discontinuance ofPremium. On discontinuance of premium,policyholder can either revive the policy orwithdraw the funds, by paying the applicablediscontinuance (surrender) charges, if any.

In case of a Unit Linked Life Insurance Policy, if thepolicyholder chooses to withdraw the policy

completely, during the lock-in period, then thefund value after deducting the applicablediscontinuance (surrender) charges (if any) aretransferred to the Discontinued Policy Fund. Thepolicyholder will earn a minimum interest rate, asapplicable. Fund Management Charges ofDiscontinued Policy Fund shall be deducted. No

other charges will be deduced from the fund.Life cover and rider cover (if any) will cease toexist.

It is a duty to voluntarily disclose, accurately andcompletely, all facts material to the risk beingproposed, whether it is requested or not. Thismeans that the parties to a contract mustvolunteer to disclose material information beforethe contract is concluded. The principle applies

equally to both the proposer and the insurerthroughout the contract negotiations, but thelaw sees the proposer as the main supplier ofmaterial facts to the contract.

Doctrine of Utmost Good Faith

Deferment Date

Deferment Period

Deferred Annuity

It is the date on which the deferment periodends.

The period between the date of subscription toan insurance-cum-pension policy and the time at

which the first installment of pension is receivedis called Deferment Period. Such policiesgenerally prescribe a minimum and maximumlimit on the Deferment Period.

Deferred Annuity is a type of annuity in which theannuitant does not begin to receive paymentsuntil some future date. In deferred annuity, thereis usually an accumulation phase or defermentperiod which is till the vesting age, during which

the annuitant has to pay premiums. A corpus isaccumulated during this period which is used atthe time of vesting to buy an annuity of choice.The pension or annuity begins from the vestingage in the annuity mode chosen.





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EEquity Elite Fund

Equity Fund

Equity Optimiser Fund and Equity OptimiserPension Fund

Exclusions

The objective of this fund is to provide highequity exposure targeting higher returns in thelong term.

The objective of this fund is to provide highequity exposure targeting higher returns in thelong term.

The objective of these funds is to provide equityexposure targeting higher returns through longterm capital gains.

A provision in the life insurance policy that

eliminates coverage for certain risks, people,property, classes or locations.

Ex-gratia Claim

Expense Ratio

An insurer may make an ex-gratia payment tothe beneficiaries/ nominees where a claim doesnot meet the terms and conditions but theinsurer chooses to make a voluntary payment outof goodwill, without recognising any obligationto make such a payment.

The percentage of insurance premiums used topay for an insurer’s expenses includingoverheads, marketing, commission, expenses,costs, etc.

More specifically, the Expense Ratio is moneyused in acquiring, writing and servicing aninsurance policy. The Expense Ratio is expressedas a percentage. E.g., Advertisement Costs,

Commissions, Taxes, etc.

Electronic Clearing System

Electronic Fund Transfer

Endowment Plans

Electronic Clearing Service (ECS), an easyrenewal premium payment option, is an autodebit facility through which premiums will bedebited from the policyholder’s bank accountautomatically.

Electronic Funds Transfer (EFT), one of the manyways by which a policyholder can pay renewalpremium, is the electronic exchange or transferof money from one account to another, eitherwithin a single financial institution or acrossmultiple institutions, through computer-basedsystems.

An Endowment Plan is a savings life insuranceplan with a specific maturity date. In case anunfortunate event like death or disability occursto the policyholder during the period, the sumassured will be paid to beneficiaries/ nominees.Upon surviving the term, the maturity proceedsof the policy become payable.





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FFamily History

Financial Underwriting

Life insurance companies look at a proposer’smedical records and ask questions aboutparents’ and siblings’ medical history. The type ofmedical history and the age at which the parentor sibling had the medical condition will affectthe premiums to be paid by the policyholder. Theage at which the proposer’s family members arediagnosed with the diseases is also a majorconsideration for insurers in determining the risk.

Financial Underwriting works to cap the amountof life insurance an individual can get. FinancialUnderwriting is used to make sure that theperson who is being insured qualifies for anamount of insurance that does not exceed his/her insurable interest. An individual’s personal

and family income is considered for FinancialUnderwriting. Factors analysed under FinancialUnderwriting include the individual’s income,age and net worth, etc.

First Unpaid Premium (FUP)

Fixed Annuity

Fraud

First Unpaid Premium (FUP) refers to the first non-payment of policy premium by the policyholder.On payment of the due premium, a receipt isissued and this receipt indicates the date of nextpremium due. If this due premium is not paid,then that date becomes the date of FUP.

An annuity contract in which the insurancecompany makes fixed payments to the annuitantfor the term of the contract, usually until theannuitant dies. It provides a fixed rate of return tothe investor, offering greater predictability and asense of certainty.

Fraud is a false representation of a material fact,

intentional concealment of what should havebeen disclosed and breach of confidence,perpetrated for profit or to gain some unfair ordishonest advantage.


Solutions for Life -Simple & Smart

Protection Plans | Savings PlansWealth Creation Plans | Child Plans | Pension Plans


SMS: ‘CELEBRATE’ to 56161Toll Free: 1800 22 9090

Visit Us at: www.sbilife.co.inEmail: [email protected]




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FIt is an illegal act on the part of either the buyer orseller of an insurance contract. Insurance fraudfrom the issuer (seller) includes selling policieswith false benefit statements, non disclosure ofcharges, tampering of documents etc. From theinsured point of view it can be false claim, falsemedical history, not revealing the correct age,

etc.

The policyholder has 15 days from the date ofreceipt of the policy document to review theterms and conditions and features of the policy.In case he/ she disagrees or is not satisfied thenhe/ she can exercise this option to return thepolicy stating the reasons for his/ her objection.In case the policyholder returns the policy duringthe free look period, there would be a refund of

the premium by the insurance company, afterdeducting the expenses incurred on medicalexamination, stamp duty charges and othercharges.

Free Look Period

Fund Management Charges

Fund Value

These are charges deducted towards meetingexpenses related to fund management. Theseare charged as a percentage of the fund valueand deducted before arriving at the net assetvalue (NAV) of the fund.

It is also known as policy value. It is the total valueof units that a policyholder holds in funds.

Fund Value = (Nos. of Units x Net Asset Value)

Know Your Rights

SBI Life Insurance is committed to safeguardyour rights when you buy life insurance andsubmit a claim. It is essential that you knowwhat your rights are:

a. Right to Information about InsurancePlan, how it works and suits your needs,services, etc

b. Right to Privacy about confidentialityof your information

c. Right to Guidance on choosing theright product based on your needs

d. Availability of Grace Period

e. Availability of Free Look Period

f. Right to timely Claim Settlementg. Right to receive Professional Service

from insurance professionals exhibitinghigh ethical standards

h. Right to Complaint Resolution





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GGrace Period

Gross Premium

Group Gratuity Scheme

Group Life Insurance

The period after the premium payment due dateduring which the policyholder can make duepremium payments so that the benefits of thepolicy continue is called the Grace Period.

The total premium paid by the policyholder.

Gratuity is a statutory benefit, governed by thePayments of Gratuity Act, 1972. As per the act,gratuity is payable if an employee has renderedminimum 5 years of service at the time of exit.The minimum benefit payable is 15 days salarybased on last drawn salary for each completedservice year.

It is a single policy covering a group ofindividuals, usually employees of the samecompany or members of the same union or

association and their dependents. In group lifeinsurance, a Master Policy is issued to theemployer or association. Individual proof ofinsurability is not considered normally whileunderwriting. Rather, the underwriter considersthe size, turnover and financial strength of thegroup. Contract provisions will attempt to

exclude the possibility of adverse selection.Group Life Insurance often includes a provisionfor a member exiting the group to buy individualcoverage.

The objective of these funds is to provide longterm capital appreciation through investmentprimarily in Equity and Equity related instrumentswith a small part invested in Debt and MoneyMarket for diversification and risk reduction.

Guaranteed Addition is an additional amountthat is guaranteed to be paid to the policyholder

Growth Fund and Growth Pension Fund

Guaranteed Addition/ Loyalty Addition

Customer Responsibilities

As a policyholder, it is important for you toknow your responsibilities to enjoy the fullbenefits of your life insurance policy.

a. Understand the product features

b. Fill the proposal form yourself andprovide true and complete information

c. Read the policy document carefullyand understand the terms andconditions

d. Pay your premium regularly to availthe benefits of the plan

e. It is advisable to opt for any of theautomatic debit modes for renewalpremium payment as they reducechances of missing payment by due date

f. Review your insurance needsregularly

g. Always intimate changes in address,contact number, e-mail id and nomineedetails on priority, for better assistance





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Gas per the terms and conditions along with thematurity benefit. It is expressed as a percentageof sum assured (in traditional policies) and as apercentage of total premiums paid (in ULIPs). Thisassured amount is given to the policyholderaccording to the number of years the premiumhas been paid for.

It is the minimum interest rate that is guaranteedto be received by the policyholder, subject topolicy being in-force and fulfillment of all theterms and conditions of the plan.

Life insurance plans under which there arecertain guaranteed returns that the policyholderreceives, subject to a policy being in-force and

fulfillment of all the terms and conditions of theplan.

Guaranteed Interest Rate

Guaranteed Returns Plans

Guaranteed Surrender Value

Guaranteed Survival Benefits

As per Section 113 of Insurance Act 1938, ifpremiums have been paid for at least 3consecutive years, the policy will acquire aGuaranteed Surrender Value.

The Guaranteed Surrender Value is 30% of total

amount of premiums paid excluding thepremiums paid for the first year and all extrapremiums (charged by insurer for Health orHazardous occupation and premiums paid foradditional benefit). In addition, the surrendervalue of any existing bonus already linked to thepolicy is also paid.

The minimum benefits that the policyholder willreceive on maturity/completion of the term,

subject to policy being in-force and fulfillment ofall the terms and conditions of the plan.

LIFEINSURANCEtips

Review your life insurance

needs regularly. Always

ensure that you are

adequately insured at all

life stages.





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HHazardous OccupationThere are certain occupations, activities andhobbies that insurers put on the too-risky list.These are varied and should be checked in theexclusions section of the product disclosurestatement by the policyholder whether he/ she isinvolved in one of them.

Risky or dangerous jobs may include:Working at heights, underground, with firearms,in armed forces, as a journalist or newscameraman in a war zone or dealing withexplosives/ dangerous chemicals. There arecertain activities which insurance companiesconsider as hazardous occupations whichinclude participating in war, terrorism, riots,strikes, insurrection, criminal activities, suicide,self-inflicted alcohol and non-prescription drugshabit, etc.

Sports, hobbies and pastimes which may raiseconcern include: motor sport, hunting, racing,

po lo , para-g l id ing, bungee jumping,mountaineering, rock climbing, unqualifiedscuba diving without an instructor, etc.

It is important to remember that dangerousrecreational sports and hobbies are a problemonly if they are participated in on a regular basis.

Health insurance insures against expenses arisingdue to a medical emergency and uncertainty ofhealth such as a hospitalisation or critical illness.It prevents a medical emergency from becominga financial one. It ensures health care needs aretaken care of without depleting existing savingsand compromising your future goals.


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IIncreasing Term Insurance

Indemnity

Index Fund and Index Pension Fund

A type of term life insurance wherein the riskcover increases by some specified amount orpercentage at stated intervals over the policyterm.

Indemnity implies compensation for damages orlosses. The concept of indemnity is based on acontractual agreement made between twoparties, in which one party agrees to pay forpotential losses or damages caused to the otherparty. A typical example is an insurance contract,whereby one party (the insurer) agrees tocompensate the other (the insured) for anydamages or losses, in return for premiums paidby the insured to the insurer.

These funds closely track the Nifty Index. Theobjective of these funds is to provide the returnsclosely corresponding to returns of NSE S&P CNXNifty Index, though investment regulations may

restrict investment in group companies and somelarge cap companies listed on the Nifty Index,leading to high tracking error.

In-force Policies are policies for which thepremiums are being paid regularly or have beenfully paid.

Insurability refers to all conditions pertaining toan individual seeking insurance, that affect his/her health, susceptibility to injury and lifeexpectancy. Basically it is an individual’s riskprofile.

Insurable Interest is one of the elementsnecessary to create a valid insurance contract.Insurable Interest is said to exist when anindividual stands to gain or benefit from thecontinued existence or well-being of anotherindividual or property and at the same time the

In-force Policy

Insurability

Insurable Interest

Immediate Annuity

Income Sustainer Rider

Increasing Sum Assured

An annuity in which benefits begin soon after theannuity is purchased.

In this rider, the rider sum assured would bepayable on earlier occurence of death or total

permanent disability occurring due to anaccident or sickness. An amount of 25% of therider sum assured is payable as a lump sumimmediately on the acceptance of the claim. Anamount of 1% of the rider sum assured would bepaid every month at the end of each month fromthe date of death or total permanent disabilitydue to accident or sickness of the proposer till theremaining term or 10 years whichever is higher.(SBI Life - Income Sustainer Rider, UIN:111A020V01)

Certain plans offer an option to the policyholderswhere they can increase the sum assured offeredunder the policy, subject to terms and conditions.



D I C T I O N A R Y O F L I F E I N S U R A N C E T E R M I N O L O G Y



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IInsurance Policy Document (PolicyDocument)

Insurer

Interim Interest Rate

Document issued to the policyholder by theinsurer stating the terms and conditions of thecontract, product information and benefits,premium schedule, etc., which everypolicyholder should read carefully, is called

Insurance Policy Document (Policy Document).

It is the party which provides the insured withprotection, usually in the form of a monetarypayout, against loss as outlined in the insurancepolicy.

Interim Interest Rate is declared by the insurer atthe beginning of every financial year and is

applicable to those policies wherein there is aclaim arising out of surrender, death or maturitybefore the completion of that financial year.

Investment Risk

IR DA ( In s u ran c e R eg u la to ry an d

Development Authority)

The risk associated with a life insurance policybased on the performance of stock markets inwhich a policyholder's premiums are invested iscalled Investment Risk.

Insurance Regulatory and DevelopmentAuthority (IRDA) is an autonomous apexstatutory body which regulates and develops theinsurance industry in India. It was formed by anact of Indian Parliament known as IRDA Act1999, which was amended in 2002 toincorporate some emerging requirements.

The mission of the IRDA as stated in the act is toprotect the interests of the policyholders, to

regulate, promote and ensure orderly growth ofthe insurance industry and for mattersconnected therewith or incidental thereto.

individual would suffer a financial loss orinconvenience, if there is damage to the otherindividual or property.

There are risks which meet certain criteria and forwhich it is relatively easy to get insurance. These

include definable, accidental in nature and partof a group of similar risks large enough to makelosses predictable. The insurance company alsomust be able to come up with a reasonablepremium for insurance.

Insurance Advisor is a person who is licensedunder Section 42 of the Insurance Act 1938, inconsideration of his soliciting or procuringinsurance business, including business related to

continuance, renewal or revival of policies ofinsurance.

Insurable Risk

Insurance Advisor (Agent)






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JK Joint and Survivor Annuity (Joint AnnuityPlans)

Joint Life Insurance Plans

Key Employee or Keyman

It is an annuity issued to two individuals underwhich payments continue in whole or in partuntil both individuals die. It is also called JointAnnuity Plan.

Policies can also be issued jointly to two people –e.g., a husband and a wife can be issued onepolicy, with both being the policyholder and thelife insured. This is known as a Joint Life Policy.

Insurance taken by a business firm on the life ofan employee (Keyman) whose servicescontribute substantially to the success of thebusiness firm.


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Electronic ClearingSystem (ECS)/ Direct Debit

Instructions through select Banks

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Credit Card

State Bank GroupATMs/ Kiosks

Direct RemittanceCheque/ DD

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Onlinewww.sbilife.co.in

Electronic FundTransfer (EFT)

Net BankingSBI & other Banks

SBI Mobile BankingInternet MobilePayment Service (IMPS)

Cash upto ` 49,999/- atKarur Vysya Bank & City Union BankBranches. Also at AP Online, MP Online





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LLapse

Lapsed Policies

Life Annuity (Annuity)

It is the termination of an insurance policybecause of non-payment of renewal premium bythe end of the grace period, by the policyholder.

This refers to those policies that have been

terminated and are no longer in-force due tonon-payment of the premium due.

An agreement by an insurer to make periodicpayments that continue during the survival of theannuitant(s), till death or for a specified period.Annuities are paid in different ways, for example,Annuity for Life, Joint life Annuity, Annuity withreturn of corpus, etc.

There are two basic types of Annuities:a. Deferred Annuities: In deferred annuity, there

is usually an accumulation phase ordeferment period which is till the vesting age,

during which time the annuitant has to paypremiums. A corpus is accumulated duringthis period which is used at the time ofvesting to buy an annuity of choice. Thepension or annuity begins from the vestingage in the annuity mode chosen.

b. Immediate Annuities: The proposer has to

make a lump sum payment of singlepremium for an annuity which startsimmediately in one year/ six months/ threemonths or one month after payment ofpremium, depending upon the annuity modeselected.

Life Assured is the person whose life is insured bythe life insurance company. On death of the lifeinsured during the policy term, the death benefit

is paid to the nominee provided the terms andconditions of the policy are fulfilled.

Life Assured (Insured)

LIFEINSURANCEtips

Keep us updated in case

there is a change in your

address, contact number,

e-mail ID, nominee, etc.

to assist you better.






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Lagrees to pay the premium either regularly or in alump sum for the risk covered.

A life insurance plan under which the life assuredhas to pay premium for a limited term to avail thelife cover protection for whole life.

There are certain policies in which thepolicyholder has to pay premium for a limitedterm.

It is also called Surrender Period. On surrender ofthe life insurance policy, the time period forwhich the policyholder will not receive thesurrender value is called a Lock-in Period. If the

policyholder surrenders the policy during theLock-in Period, he/ she will receive the surrendervalue after the completion of the Lock-in Period,post deduction of applicable charges.

Limited Payment Whole Life Plan

Limited Premium Payment Term

Lock-in Period (Surrender Period)

Loyalty Addition/ Guaranteed AdditionThis is an additional amount that is guaranteedto be paid to the policyholder as per the termsand conditions along with the maturity benefit. Itis expressed as a percentage of the sum assured(in traditional policies) and as a percentage oftotal premiums paid (in ULIP). This assured

amount is given to the policyholder according tothe number of years the premium has been paidfor.

Life Expectancy

Life Insurance

It is the average period that a given person isexpected to live. This is useful for insurancepremium calculations. Average life expectancy iscalculated separately for male lives and femalelives.

To calculate average life expectancy, a widevariety of characteristics can be looked at,including gender, country of residence, familymedical history, and many lifestyle habitsincluding smoking, drinking, eating, exercise andsleep patterns.

Life insurance is a contract between apolicyholder and an insurer, where the insurerpromises to pay the beneficiary/ nominee a sum

of money upon the death of the insured person.Depending on the contract, other events such asterminal illness or accidental total permanentdisability may also trigger payment. The insured






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MMaterial Fact

Maturity Benefits

Maturity Date

Medical Underwriting

A material fact is one that influences the judgment of an insurer in fixing the premium oraccessing the risk assured.

The benefits received by a policyholder after the

completion of the policy term are called MaturityBenefits.

It is the date on which the policy term ends.

Medical Underwriting is where the underwriteractually researches the health and medicalhistory of the individual in a detailed andaccurate way by checking the medical records of

the proposer for the past few years and insist ingon a medical check-up. This medical check-upcan be either general or more comprehensivedepending upon the age of the proposer, his/ her

medical history and the amount of insurancecover he/ she is asking for. If the proposer isfound to be in perfect health, then he/ she wouldbe considered as low risk by the underwriter.

A minor is a person under a certain age, which

demarcates him/her from a major. The agedepends upon jurisdiction and application. Forlife insurance in India, minor lives are consideredto be less than 18 years of age.

Misrepresentation means a false statement offact made by one party to another party, whichhas the effect of inducing that party into acontract. A misrepresentation in a contract cangive a party the right to cancel the contract

provided the statement was material.

A misrepresentation on the part of the insured inan insurance policy can give the insurer the right

Minor Lives

Misrepresentation

Get your policy details on Mobile!!

Registration:

SMS REGNEW (Policy No) (Date of Birth inDD/MM/YYYY format) to 56161 or92500 01848

The service will be activated in 24 hours.

Send a SMS* to 56161 or 92500 01848 andget the following details:

• Fund Value: FV (Policy No)

• Fund Switch Transaction details: SWTR (Policy No)

• Policy Status: POLSTATUS (Policy No)

• Renewal Details: RENDET (Policy No)

• Policy Dispatch Details: NEWPOL

(Policy No)(if you have purchased a newpolicy in last six months)

*Each SMS will be charged as per the mobile planapplicable for SMS to these special numbers.






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MMoney Market Fund and Money MarketPension Fund

Moral Hazard

Morbidity Rate

The objective of these funds is to park the fundsin liquid and safe instruments so as to avoidmarket risks on a temporary basis.

It refers to the habits and activities of anindividual that increase risks associated with his/her life. They may also arise from a state of mind,i.e. the attitude and behaviour of the individual.Example: consumption of alcohol, smoking, etc.

It is the frequency at which a disease appears in apopulation. Morbidity Rates are used in lifeinsurance to determine the correct premium tobe charged to the customer. Morbidity Rates help

insurers predict the likelihood that an insured willcontract or develop any number of specifieddiseases.

Mortality ChargesDepending upon the age and the amount ofcover, the charges levied towards providinginsurance cover to the insured are calledMortality Charges. Mortality Charges depend ona number of factors such as age, amount ofcoverage, state of health, etc.

to cancel the policy or refuse a claim. An insurermay do this only if the misrepresentation wasmaterial to the risk insured against and wouldhave influenced the insurer in determiningwhether to issue a policy.

It is calculated as Annual Mortality Rate dividedby Premium Frequency (Premium Frequency is 1for yearly, 2 for half yearly, 4 for quarterly and 12for monthly).

In Money Back Plans, a certain percent of thesum assured is returned to the life assuredperiodically as survival benefit. On the expiry ofthe term, the balance amount is paid as maturityvalue. The life risk may be covered for the full

sum assured during the term of the policy,irrespective of the survival benefits paid.

Mode based Mortality Rate

Money Back Plans






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NNAV Guarantee Plans

Net Asset Value (NAV)

In NAV guarantee plans, the highest NAVachieved during the tracking period from theinception is computed and if it is higher than thematurity NAV, then the highest NAV is used todetermine the maturity amount. Usually, theguarantee is only applicable at the maturity ofthe policy.

In Unit Linked Insurance Policies, the premium isinvested in equity or debt markets or both. Thepremium is allocated in the fund chosen bypolicyholder. The fund has particular valueassociated to it which is known as Net AssetValue (NAV).

Net Asset Value means Market Value of aninvestment held by the company’s fund, plus Net

Current Assets, less the value of any currentliabilities, less provisions, if any. When the NAV isdivided by the number of units existing at thevaluation date, the unit price of the fund isobtained.

In other words, NAV is the value of each unit ofthe fund on a given day.

Illustration: 500 people invest ` 55.00 each in aULIP. After initial charges have been deducted, ` 50.00 remaining per person, is invested in anew equity fund. The amount, i.e. ` 25,000.00 isinvested in a distinct portfolio of that Fund. The

NAV at the beginning = 5000 / 500 = ` 10.00.The NAV at the end of day = Market Value ofFund – liabilities / no. of outstanding units.Assuming a small growth, the new NAV at end ofday = (5250 – 50) / 500 = ` 10.40. Hence, theNAV per unit, per policyholder at the end of theday is ` 10.40.

The above example is merely an illustration.Usually, the amount invested is subject todeduction of charges as per plan features.

Nomination is where the life insured proposesthe name of the person(s) to whom the sum

Nomination

LIFEINSURANCEtips

Pay your premiums

regularly to keep your

policy in-force and to

continue availing its

benefits.






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NNon Disclosure

Non-Medical Cases

Life Insurance is a contract between insurer andinsured based on the principle of UberrimaeFidei, which is a Latin expression meaning‘Utmost good faith’. Under this principle, theinsured must disclose to the insurer any matterthat may possibly affect the risk of loss.Moreover, that obligation extends to all material

information – whether asked for or not.

Thus, the proposer must disclose to the insurereverything that could affect the risk of insurance.More importantly, any non-disclosure of anymaterial information or fact can allow the insurerto declare the contract null and void in law. Inthat case, nothing is paid out in the event of aclaim under the policy.

Policies on which there are no medicalrequirements raised by the life insurer, beforepolicy issuance, are called Non-Medical cases.

Non-Participating Policies

Non-Standard Life

Most endowment policies have a savingselement included in the premium. This amount isinvested by the insurance company on behalf ofthe policyholders and profit earned on it is againdistributed back to the policyholders in the formof bonuses. Plans in which the policyholders arenot entitled to participate in the profit of the

insurance company are known as ‘WithoutProfit’ plans or ‘Non-Participating’ plans. A pureterm insurance plan is an example of a ‘WithoutProfit’ plan.

Any individual, who cannot be granted a policyunder normal premium rates but can be grantedwith an extra premium is considered a Non-Standard Life.

insured should be paid by the insurancecompany after the life insured’s death. The lifeinsured can nominate one or more than oneperson as nominee. Nominees are entitled to avalid discharge and have to hold the money as atrustee on behalf of those entitled to it.Nomination can be done either at the time thepolicy is bought or later. A person having a policy

on the life of another cannot make a nomination.Under section 39 of the Insurance Act 1938, thepolicyholder on his/ her own life may nominatethe person or persons to whom the moneysecured by the policy shall be paid in the event ofhis/ her death.

Nominee is the person nominated by thepolicyholder to receive the amount under apolicy and to give a valid discharge to the insurer

on settlement of claim under a life insurancepolicy.

Nominee






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OOccupational Hazards

Ombudsman

Occupations which expose the insured to greaterthan normal physical danger by the very natureof the work in which the insured is engaged, andthe varying periods of absence from theoccupation, due to disability, that can beexpected are called Occupational Hazards.

The institution of Insurance Ombudsman wascreated by the Government of India as pernotification dated 11th November, 1998 withthe purpose of quick disposal of the grievancesof insured customers and to mitigate theirproblems involved in the redressal of thosegrievances. This institution (Ombudsman) is ofgreat importance and relevance for theprotection of interests of policyholders and also

in building their confidence in the system. Theinstitution has helped generate and sustain faithand confidence amongst consumers andinsurers.

Insurance Ombudsman has two types offunctions to perform:(1) Conciliation(2) Award making

Insurance Ombudsman is empowered to receiveand consider complaints in respect of personal

lines of insurance from any person who has anygrievance against an insurer. The complaint mayrelate to any grievance against the insurer, i.e.(a) Any partial or total repudiation of claims by

the insurance companies

(b) Disputes with regard to premium paid orpayable in terms of the policy

(c) Dispute on the legal construction of thepolicy wordings in case such dispute relatesto claims

(d) Delay in settlement of claims and(e) Non-issuance of any insurance document to

customers after receipt of Premium


Claim Settlement Process

At SBI Life, we are committed to protect theinterest of our policyholders/ stakeholdersand ensure that the Claim Amount isprovided to the Nominee/ Beneficiary wellwithin the prescribed timelines laid down byIRDA.

Claim Intimation

Intimate about the claim at any SBI LifeBranch with all the relevant documents asmentioned in the policy document.

Requi rements Submiss ion(if any)

The claimant need to submit the documentsrequired by SBI Life for checking theadmissibility or otherwise of the claim.

Final Decision

Throughout the Claim SettlementProcess, for any assistance, feel free towrite to us at [email protected]

Step 1:

Step 2:

Step 3:





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PP/E Managed Fund

Paid Up Policy

Paid Up Value

The objective of this fund is to provide long termcapital appreciation through dynamic assetallocation with reference to the Forward PriceEarning (P/E) Multiple. The allocation to equityand equity related securities is determinedlargely by reference to the forward price earning

(P/E) multiple on the NSE S&P CNX Nifty Index,the remainder is invested in Debt Instruments,Money Markets and Cash.

It is an insurance policy that requires no furtherpremium payments but continues to providecoverage as per the paid up value calculated.

Insurance companies will offer the policyholder

the right to convert a normal policy into a paid uppolicy if they have already paid premiums for aminimum of three years. After this period, if thepolicyholder is unable to pay the remaining

premiums then under the paid up option, thepolicy is not cancelled. Instead, the sum insured isreduced in proportion to the number ofpremiums paid. If other benefit related to thesum insured are payable, the benefit will now berelated to the reduced sum insured, which is thePaid Up Value.

When calculating the Paid Up Value of a withprofit policy, there is no change in the bonusalready vested or granted. Only the sum assuredis reduced in proportion to the premiums paid.The accrued bonus is added to the reduced sumassured to arrive at the Paid Up Value. However, apaid up policy is not entitled to receive furtherbonuses.

The formula to calculate the Paid Up Value is as

below:

Paid Up Value = [{No. of Premiums Paid / Total No.of Premiums Payable} X Sum Assured] + Bonus (ifany)

LIFEINSURANCEtips

One of the key components

of your budget should be

having a comprehensive

health cover for you and

your family.






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P= [(8/20) × ` 5,00,000] + ` 50,000= ` 2,00,000 + ` 50,000= ` 2,50,000

The Paid Up Value of the policy will be ` 2,50,000.

It is an illness or injury that decreases anindividual’s ability to perform some of the majorduties of his or her job but does not causecomplete cessation of employment.

A policyholder can withdraw some amount fromthe fund value of his/ her life insurance policy(ULIP) to fulfill his/ her liquidity requirements(planned and unplanned future needs). This

feature is called Partial Withdrawal. A certainnumber of withdrawals is granted free by the lifeinsurer. Thereafter, for each withdrawal, chargeslevied by the insurer are called Partial WithdrawalCharges.

Partial Disability

Partial Withdrawal Charges

Partial Withdrawals

Participating Policies

A policyholder can withdraw some amount fromthe fund value of his/ her life insurance policy tofulfill liquidity requirements (planned andunplanned future needs). This feature is availablein case of ULIPs and can be availed only after fiveyears from the commencement of the policy. Themaximum amount and the number of times apolicyholder can withdraw may vary fromproduct to product. A certain number ofwithdrawals are granted free by the life insurer.

Most endowment policies have a savingselement included in the premium. This amount isinvested by the insurance company on behalf ofthe policyholders and earns a profit on it which isagain distributed back to policyholders in the

form of bonuses. Such plans where policyholdersare entitled to participate in the profit of theinsurance company are known as ‘With Profit’plans or ‘Participating’ plans. Most endowment

EXAMPLE: Rahul has a savings policy. Thefollowing are the details of the policy:

Policy Term = 20 yearsDate of commencement of policy = 4th June,2001Sum Assured = ` 5,00,000

Premium Payment Mode = AnnuallyLast Premium Paid = 4th June, 2008Number of Premiums Paid = 8Total number of Premiums Due = 20Vested Bonus = ` 50,000

As seen from the data above, Rahul stoppedmaking premium payments after the eighth year.The policy will not be fully cancelled. Instead, thesum insured will be reduced in proportion to thepremiums paid.

Paid Up Value = [{No. of Premiums Paid / Total No.of Premiums Payable} X Sum Assured] + Bonus (ifany)






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Pplans, money back and whole life plans areparticipating plans.

Charges levied by the insurer/ bank for collectingthe premium payment instrument.

Pension plans (also referred to as retirementplans) are offered by life insurance companies tohelp individuals build a retirement corpus. Onmaturity, this corpus is invested for generating aregular income stream, which is referred to aspension or annuity. Pension plans are distinctfrom life insurance plans, which are taken tocover risk in case of an unfortunate event.

When an employee retires, he/ she no longer gets

his/ her salary while his/ her need for a regularincome continues. Retirement benefits likeProvident Fund and gratuity are paid in lump sumwhich are often spent quickly or not invested

Payment Instrument Collection Charge

Pension Plans or Annuity Plans

prudently - with the result that the employeefinds himself/ herself without a regular source ofincome in his/ her post-retirement days. Pensionis therefore an ideal method of retirementprovision because the benefit is received in theform of a regular income.

It is an illness or injury that prevents a personfrom working for the rest of his or her life.

It is the capability of the policyholder to paypremiums regularly.

It is similar to fund value in Unit Linked plans.Policy Account provides the status and details of

investment returns made by the policyholder forcertain life insurance plans.

Permanent Disability

Persistency

Policy Account


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PPolicy Premium Component

Policy Revival

The Policy Premium Component is basicallypremium contribution i.e., net of Risk PremiumComponent and Expense Premium Component.

When a policy lapses, it benefits neither the

insurer nor the insured. The insured loses theinsurance risk cover for the full amount and isexposed to possible adverse circumstances,should a claim arise. Because lapsation affectsboth parties adversely, insurance companiesmake it possible for lapsed policies to be broughtback into full force. This process is called‘Revival’. Insurance companies provide thepolicyholder with the option of reviving a lapsedpolicy. To revive a policy, the following willnormally be necessary:

• Payment of outstanding premiums withinterest

• Proof of continued good health• A fee for reinstatement or revival (some

insurers)

• Any other documents required for PolicyRevival

It is the period for which a life insurance policyprovides life insurance coverage.

Policyholder is the person who owns a lifeinsurance policy. This is usually the insuredperson, but in some cases, it may also be aproposer of the policy such as a spouse, a partneror a company.

Reserve Bank of India (RBI) issued a circular to allfinancial institutions reiterating its stand thatthey have to conduct proper Know Your

Customer (KYC) to avoid the instances of moneylaundering and financing of terrorism.

Policy Term

dictionary of life insurance terminolgy

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