Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period. For example, at ICICI Prudential Life Insurance, you pay premiums for a specific term and in return, ICICI provide you with a Life Cover. This Life Cover secures your loved ones’ future by paying a lump sum amount in case of an unfortunate event. In some policies, you are paid an amount called Maturity Benefit at the end of the policy term.
Commonly used terms in Life Insurance
- Life Assured: It is the person who is covered under the insurance policy
- Proposer: It is the person who pays the premiums of the policy. For example: If you have bought the policy for yourself, then you are both the Life Assured as well as the Proposer. Similarly, if you purchase an insurance policy for a family member, then you are the proposer and the family member is the Life Assured.
- Nominee or Beneficiary: It is the person you appoint at the time of buying the policy to receive the benefits of your insurance policy, in your absence.
- Insurer: The insurance company that sells the life insurance policy is called the Insurer (for example, ICICI Prudential Life Insurance).
- Life Cover: It is the amount that the Insurer will pay to your Nominee in case of an unfortunate event.
- Maturity Benefit: For Protection + Savings policies, the Insurer pays a certain lump sum of money on completion of the policy term. This amount is known as the Maturity Amount.
- Premium: A premium is the amount you pay to the insurer for receiving the benefits of the insurance policy. These payments can be made on a regular basis throughout the policy duration, for a limited number of years or just once, as per the options available under the policy you choose.
- Premium Payment Term: The number of years for which you pay the premiums is known as the Premium Payment Term.
- Policy Term: The number of years for which the Life Cover continues.
What are the Different Types of Life Insurance?
- Term Life Insurance Plans – Pure risk covers
- Unit linked insurance plan (ULIP) – Insurance as well as Investment opportunities
- Endowment Plan – Insurance and Savings
- Money-Back – Periodic returns alongside insurance cover
- Whole Life Insurance – Whole life coverage to the life assured
- Child's Plan – For achieving your child's life goals like education and marriage
- Retirement Plan – Post-retirement income
What Affects Your Life Insurance Premiums?
- Family medical history
- Driving record