What are the important life insurance terms that you must know?

1. Who is the Policyholder?

The policyholder is an individual who purchases a life insurance plan. If you are working and earning a salary, then you can purchase life insurance as a policyholder. However, if you do not have a source of income, you cannot buy a life insurance plan for yourself.

2. What is Sum Assured?

It means an amount as specified in the term insurance policy schedule, which is payable to your nominee upon your death. In other words, it is the life cover amount that the insurance company promises to pay your family in case of your unexpected death within the policy tenure.

The calculation of the maximum value of sum assured and required premium amount is based on your current income, selected policy tenure and the mode of payout.. You can use an online life insurance calculator to get an estimate of the Sum Assured and the premium amount payable that you can avail under a plan.

  

3. Who is a Nominee?

 

The nominee is the individual who receives the insurance plan benefit amount (the Sum Assured of the policy), after the death of the life insured. Therefore, the nominee should be a family member.

While you can include your mother, father, spouse, or child as a nominee, it is also possible to nominate relatives such as an uncle, aunt, and nephew.