Life Insurance is a contract in which the insurance company grantees the policyholder that if something happens to them, the insurance company will give compensation for loss of life. The beneficiary will avail the specified sum from the insurer. However, while opting for this insurance, there're a few important terms to take into knowledge. They are listed below:
Life assured: This refers to the insured person, for whose life, insurance has been obtained. He may or may not be the policyholder, who is a person who pays the premium.
Sum assured: It is the amount of money that the insurer has agreed to pay in the event of the death of the insured.
Nominee: This term refers to the legal heir of the policyholder or the insured person, who will receive the money from the insurance company in the event of the death of the insured.
Maturity age: It is the age of the life assured at which the policy ends.
Riders: These are certain add-on features that increase the coverage provided by a basic life insurance plan.
Death Benefit: It is the amount of money that the insurance company pays to the nominee in case of death of the insured during the policy period.
Free-look period: It refers to the period during which the insured may return the purchased policy if he finds it unfavourable.
Surrender value: If the policyholder wants to discontinue the policy mid-term, the life insurance company pays a fixed amount, known as surrender value. A policy may or may not have a surrender value.