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Glossary-Life

Insurable Interest

A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.

Insurability

Insurability refers to all conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.

Insured

The person whose life is covered by a policy of insurance.

Immediate Annuity

An annuity providing for payment to being immediately.

Lapsed Policy

A policy which has terminated and is no longer in force due to non-payment of the premium due.

Loyalty Additions

The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions.

Maturity

The date upon which the face amount of a life insurance policy, if not previously invoked due to the contingency covered (death), is paid to the policyholder.

Maturity Claim

The Payment to the policyholder at the end of the stipulated term of the policy is called maturity claim.

Misrepresentation

Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature.

Moral Hazard

Moral Hazard refers to increase in probability of loss that results from dishonesty in the character of the insured person. Thus it is the dishonest tendencies on the part of the insured person that may induce that person to attempt to defraud the insurance company.

Nomination

An act by which the policyholders authorises another person to receive the policy moneyies. The person so authorised is called Nominee.

Life Assured

LIfe Assured refers to the person whose life is being insured.

Last Birth Day(l.b.d)

Age at last Birthday

Lien

In some cases extra risk is expected to decrease over a period of time. In such cases proposal is considered and accepted with lien. Lien operates through out the period, on a decreasing basis.In the event of death during the lein period full sum assured is not payable.

Eg: If 25% decreasing lein is imposed for 5 years.It is understood that in first year risk cover(sum assured payable) is only upto 75%,second year-80%, third year-85%,fourth year 90%,fifth year 95%, and from sixth year onwards lien is not operative.

Loyalty Additions

Under certain life policies loyalty additions are given as an additional benefit to the policy holder. The rate of addition depends on the LIC's performance and is allowed only if the policy is in full force.

Moral Hazard

Moral Hazard is said to exist in the case where we notice the absence of a genuine need for a life insurance or when a proposal for insurance is submitted by an individual beyond his means.

Near Birth Day(n.b.d)

Age on nearest birthday

Nominee

Nominee is the person who is nominated to receive the amount under a policy and to give a valid discharge to the insurer on settlement of claim under a life insurance policy.

Non-Standard Life

Any individual, who cannot be granted a policy under normal rates of premiums but can be granted with an extra premium over normal rates of premium, is considered as a Non-Standard Life.

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