Terminologies and Procedures to Understand When Applying For Life Insurance
March 10, 2021
Life can be complex at times, but a life insurance policy needs to be simple. So here are a few Life Insurance terms made easy. Before we get on to it, let’s answer the simplest question of all - What is Life Insurance?
A Life Insurance Policy is a contract between you and a Life Insurance company that covers the value of your life by paying a said amount, in case you face an unforeseen death.
That’s the person whose name is on the policy, is the owner of it and pays the premium for the said policy. You may or may not be the life assured. This is one of the basic details you need to keep in mind while filling out your policy documents.
2. Life Assured
Life assured is the person who is insured. It is for them that the policy is purchased and it covers them in case of untimely death. In most cases, the breadwinner of the family is life assured. In some cases, the life assured is also the policyholder. Remember, to avail of a reliable Life Insurance Policy, you will have a battery of medical examinations done to verify and evaluate your health.
3. Coverage or Sum Assured
A Life Insurance Policy covers a life of the insured and that is the financial loss that may arise due to the untimely death or passing of the life assured. The sum assured is the amount that the insurer agrees to pay in such a case.
When you are looking for a reliable Life Insurance online you might come across the term ‘Sum Assured’ or in some places mentioned as ‘Coverage’ in the policy documents and details, which is what you need to look at when searching for the best Life Insurance online.
If you are the policyholder and the life assured, then your nominee is the one who stands to benefit the sum assured by the insurance company and the other benefits that your life insurance policy holds. Usually the legal heir/nominee is the wife, child/children or in some cases the parents of the policyholder. They can claim the Life Insurance Policy, if the life assured dies during the tenure of the policy.
5. Policy tenure
Policy tenure is also known as Policy term or Policy duration. How long does your Life/Term Insurance Policy provide you with the risk coverage? That’s what the tenure is. It’s the time for which the policy provides coverage for your life. The tenure can vary between 1 year to a 100 years, and depends upon the type of Term Life Insurance you avail.
While the maturity age of the Life Insurance Policy is the time at which the policy of the life assured gets terminated. Basically, the Life Insurance company you avail your policy from, declares up front the maximum age till which your term life insurance gives coverage to the life insured.
Like every policy you buy, premium is the amount you pay to own the said policy, keep it active and reap the benefits of it throughout the tenure of the life insurance policy. This brings to the question - What is the premium payment mode/frequency/term?
It depends on the Life Insurance Policy you have chosen and it can be a Single Payment Policy, a Regular Payment Policy which could be monthly, quarterly, half-yearly or annual payment or it can be a Limited Payment Term Policy. Usually a policy is bought for a period of 10 years, 15 years, 20 years and so on.
While a Life Insurance Policy is set on life assured, you can also claim the amount through the contract of annuity. This is where you/your nominee, can avail of a fixed or variable payment, either in the future or immediately. This is usually done when one decides to supplement their income post retirement. So, you should avail of the best Life Insurance Policy to support your future plans.
A Rider is an added feature to your Term Insurance Policy which widens the scope of the base Life Insurance. This is usually done in the case of critical illness or accidental deaths, while there are other types of riders that can be availed while purchasing a Term Insurance Policy.
Now that you know what you need to look for while purchasing a Life Insurance Policy from ICICI Bank -- all that’s left to do is select the best Life Insurance plan for you and worry less about what to do next.
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