In India, the typical dispersion and density of life insurance is merely 2.76%. Although there have been some improvements in this aspect, the overall progress has been quite slow in the country. On top of that, a big chunk of people are still not aware of the benefits of life insurance policies and the numbers for policy penetration are an indicator of the same.
Mishaps and accidents are sturdy indicators of how easily broken human life can be and how important it is for us to insure our lives in a systemic way. Life insurance is a significant tool in terms of providing an individual's family with both security and safety.
Life insurance policies act as a defensive cover to protect the insured's dependents too. In case the individuals do not insure their lives, their dependents wind up facing the catastrophic loss of their loved ones together with the mounting liabilities like loans, rent, child services, EMI's, etc.
It should be clear by now that life insurance is a vital requirement for families in order to feel safe and secured. It offers a sense of financial protection and confidence to carry on with yours and your loved ones lives without losing yours or theirs everyday constancy.
To help you understand some of the important terms associated with life insurance plans, here's a quick guide:
1. Policyholder: The term policyholder is basically referred to the individual who pays the premium against the life insurance policy that is purchased. The policyholder signs a life insurance agreement with a life insurance company.
2. Premium: A premium stands for the cost of the policy that the policyholder has to pay to the life insurance company for covering his or her life. These premiums could be paid on a yearly or monthly basis, depending on the type of policy or plan the policyholder chooses to sign up for.
3. Maturity: Maturity is basically the stage at which the policy term is completed. After the policy matures, the life insurance contract ends.
4. Insured: The term insured basically stands for the individual whose life is basing secured via the life insurance plan. After his or her death, the insurance company is responsible in terms of providing financial amount (Sum Assured) to the nominee or dependents.
5. Sum Assured: The term Sum Assured is the amount that the life insurance company pays the dependents/nominee of the insured in case those events take place which are specified in the life insurance agreement.
6. Policy Term: Policy term basically indicates the specified length of time listed in the life insurance contract against which the life insurer offers a life cover. It stands for the time period during which the life insurance agreement is in force. The policy term is listed in the life insurance contract.
7. Nominee: A nominee of a life insurance policy basically stands for an individual listed in the life insurance agreement. The nominee of the policy is entitled to get the predetermined compensation, as a part of the life insurance policy.
8. Claim: In the event of the unfortunate demise or death of the insured, the nominees can file a claim with the life insurance company in order to receive the predetermined payout amount.
Inference:
As previously in this article I had already put the light on the fact that most of the people in India do not have a life insurance policy, and even if some of them do, they are not well acquainted with the hard terms of a life insurance policy.
Without knowing the basic life insurance terms it could be really hard to choose and buy the right cover. It may cost you later in the long run. This is why it calls for immediate action to know these glossaries associated with life insurance plans.
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