Life Insurance terms simplified

In today’s world which is full of uncertainties, buying life insurance has become inevitable for each and every individual; but while buying it you should also always make sure that you understand each and every term contained in the policy document. Some of these terms might seem to you very simple and you would want to ignore it while going through policy document but it is extremely important that you understand all of these terms.

1. Life Assured: Life assured is the person who will be covered under the life insurance policy. It might be the same person who is paying the premium but not compulsory as in case an individual paying premium for his spouse, in such a scenario life assured is spouse and not the person paying the premium.
2. Proposer: Proposer is the person who is paying the premium under the life insurance policy and is not necessarily life assured under the policy.
3. Nominee: Nominee is the person who will receive the death benefits under the life insurance policy in case of the death of the life assured.
4. Date of Commencement: Date of Commencement is the start date of the policy from which insurance cover will be effective.
5. Sum Assured: Sum Assured is the amount of insurance cover you will get under the policy. This amount is payable to the nominee in case of deathof the life assured.
6. Premium: Premium is the amount you will pay under the insurance policy for getting the insurance cover.
7. Term: Term is the duration of the policy for which the insurance policy will be valid.
8. Premium Paying Term: Premium Paying Term is the duration under the policy for which the Premium amount has to be paid. It can differ from the Term of the policy as in some insurance policies Premium Paying Term is less than the Term of the policy.
9. Mode: Mode is the frequency of premium payment; it can be Monthly, Quarterly, Half-Yearly, Yearly or it might be Single Premium in case you have to pay only 1 premium for the whole Term of the policy.
10. Maturity Date: Maturity Date is the date when all your benefits under life insurance policy will cease and you will no longer be covered under the policy. Any maturity benefit will be paid out and the policy will be closed.
11. Survival Benefit: Survival benefit is the amount payable in case of money back policy. This amount is paid as a benefit after every few years during the term of the policy. It usually ranges between 15-25% of sum assured.
12. Surrender Value: Surrender value is the amount you will receive in case you do not wish to continue with the policy. It is the certain percentage of the premiums paid after deduction of surrender charges which you will receive in case you surrender the policy.
13. Fund Value: Fund value is applicable in case of Unit Linked Insurance Plans (ULIP). It is the current value of your investment made towards ULIP. This investment is market linked and will fluctuate depending upon the performance of the fund manager managing the portfolio.
14. Maturity Value: Maturity Value is the amount which you will receive at the time of maturity of the policy.