Terminologies in an insurance contract

There are some terminologies involved in an insurance contract that every person taking insurance should know about.  I have discussed some of the terminologies here and we can know about more as the blog grows.

Premium:

             This is the amount that should be paid to the insurance company by the policy holder to keep the contract in live.  According to the policy conditions if the policy is not being paid your policy may expire.

Policy Term:

             This denotes a period for which the premium has to be paid to keep the policy in live according to the policy conditions.

Maturity Sum Assures or SA:

             This is the amount that will be returned by the insurance company after the specified policy term.

Riders:

             This is a small additional amount that will be paid by the policy holder along with the premium for extra benefits.  For example if a policy holder wants his nominee to get double the SA if his death occurs due to accident then he should take the Double Accident Benefit rider that can be taken at a low cost.

 

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Insurance concept

What is an insurance actually? 
                   An insurance is a contract between the company and the proposer.  The insurance policy document consists of all the terms and conditions of the insurance contract in which the proposer mades his signature and accepts the insurance contract.  Mostly this contract is done for a particular period of time.  The breaking of the contract insists a different set of rules.

Major people involved in insurance contract

•         Insurance company - The company which gives the insurance.
•         Proposer - The person who proposes for a insurance policy.
•         Life Assured - The person whose life is going to be covered under the particular insurance contract.
•         Nominee - The person to whom the policy amount should be delivered on the death of the policy holder within the contract period.
•        Asignee - The policy can be assigned to someone else so that all the benefits of the policy is redirected to the asignee.  If a loan is taken on the policy the person who gives the loan becomes the asignee of the policy.

        Hereafter i will discuss a lot more about different plans in the insurance especially from Life Insurance Corporation of India which has more than 16 crore policy holders.

 

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Insurance Ratio

In India Life insurance or health insurance is not a mandatory contract unlike some of the developed nations.  Around 90% of the great indian population doesn't have an insurance policy.  But it is common to find people with more than one insurance policy and that too with heavy policy amount.  How this contradiction occurs?  This is just a reflection of the contradiction between the living and educational standards of the people of India. 

People of India are seeing the insurance plans not only as life cover plans but also as investment plans.  They are always questing for both.  It is this taste that made way to build lot and lot of different plans.  The plans are available to people in all the levels of the society. For example a premium can be even an amount of Rs. 250 to thousands or lacs depending on the policy amount.  There are some seasonal policies also which are called 'close ended' plans.  Those policies can be taken only between a particular period of time.

 

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• Insurance Domain in India
• Important Insurance Terminologies
• Insurance Domain in India