Insurance is a promise of compensation for specific potential
future loss in exchange for a periodic payment. Insurance is designed to
protect the financial well-being of an individual, company or other entity in
the case of unexpected loss.
We all know about insurance but many times we ignore some
basic features of insurance policy.
Here we will try to explain some of the words which your
agent normally use while explaining any insurance policy.
By explaining the below terms we want to make you familiar
with your insurance policy.
Sum assured
(also known as Cover) - This refers to the amount paid out on a policy if you
die within the Term of insurance plan. In case of an endowment policy Sum
Assured can be paid out on maturity along with the bonus and in case of Money
back policies a part of Sum Assured is paid out on regular intervals and on
maturity along with the bonus. On regular intervals. Endowment policy It is the
guaranteed amount to be paid out at maturity with or without Bonus (Depend upon
the policy).
Premium - The owner
usually pays a fixed premium amount in exchange for the insurance company's
guarantee to cover any economic losses incurred under the scope of the
agreement of insurance.
Bonus - It is the
amount added to the basic sum assured under a with-profit life insurance
policy.
Surrender
value - The amount payable by the insurer to the owner of an
investment-based plan in case he opts to terminate the policy after three years
(the mandatory lock-in period) but before its maturity date. The surrender
value will be the premium paid till date minus surrender charges and any
outstanding loans due.
Endowment
Policy - In this plan the amount is paid to a policyholder if he
lives survives the term even after the tenure of the insurance contract or to
the beneficiary if the insured person dies before the date on which the policy
matures.
Term
Insurance - Term life insurance is a life insurance plan in which person
can get the huge insurance coverage with fewer lower premiums. In this plan
beneficiary will get the cover amount only if the insured person dies within
the policy term. Unlike Endowment policy policyholder don't get any amount if
insured person lives even after the policy expires. One should have at least
one Term Insurance policy. One can consult a financial planner for the best
possible insurance solution.
Whole Life
Insurance - A life insurance policy where benefits are payable to a
beneficiary on death of the insured, whenever that occurs. The premium payment
can happen for a specified number of years or throughout life.
ULIP - It is an
abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance
policy which provides a combination of risk cover and investment. Some part of
the amount invested in Best
Ulip Insurance plan is used to provide the insurance cover and the remaining
is invested in equity and debt investments and denoted as units.
Money Back
Plan - A plan in which part of the sum assured is paid back to
the policyholder at regular intervals and a part of sum assured is paid at
maturity along with bonuses.
Rider - An add-on
benefit available at the option of the policyholders that may alter certain
features of a policy by increasing or restricting benefits.
Survival
benefits - The amount payable to a policyholder under an
investment-based plan if he survives the policy term. Typically, it is the sum
assured plus returns (guaranteed additions / bonus) accrued.
Source:
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