Accident
An event or occurrence which is unforeseen and unintended usually resulting in a loss to a person or property.
Actuary
A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary determines the amount of money that must be contributed periodically to an insurance or pension fund in order to provide future insurance benefits.
Adverse Selection
The tendency of people who believe they have a greater-than-average likelihood of loss to apply for or continue insurance to a greater extent than do other people who have lesser-than-average likelihood of loss.
Age Limits
Stipulated minimum and maximum ages below and above which an insurance company may not accept applications or may not renew policies.
Agent
An Agent or Insurance Agent is a person licensed by IRDA to solicit or procure insurance business for an insurance company. An Agent usually identifies prospective insurance customers, assists them in deciding their insurance needs and in applying for insurance.
Annuitant
The person during whose life an annuity is payable, usually the person to receive the annuity.
Annuity
A policy under which an insurance company promises to make a series of periodic payments to the policy holder in exchange for a single premium or a series of premiums.
Application
A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application is the basis of the insurance contract when the policy is issued.
Assets
The things of value owned by a person, organization etc.
Assignment
Assignment is the transfer of rights in an insurance policy from one person to another. Sometimes, the term is also used to denote the document that evidences such assignment or transfer.
Assumptions
Conditions and rules underlying the calculation of a benefit, including expected interest, mortality and turnover.
Assurance
An agreement that guarantees the payment of a specified amount of money usually upon the death of the insured. In some cases, the benefits are payable in other circumstances specified in the agreement, such as total disability or critical illness etc. The term insurance and assurance are today generally accepted as synonymous, although not originally so. The term "assurance" is used more commonly in Canada and Great Britain than in the United States.
ADD-ONs
A supplementary benefit that becomes part of basic insurance contract and expands the scope of benefits available under a policy.
Back Dating
Notionally commencing the policy from a date earlier than the date of application so that premium rate will be lower (normally within the same financial year).
Benefit
The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage when an insurance claim is admitted.
Bonus
The share of surplus declared by an insurance company in favour of the policyholders in "with-profit" policies.
Cancellation
The discontinuance of an insurance policy before its date of maturity, either by the insured or the insurance company.
Cash Surrender Value
The amount of money the policyholder will receive, after necessary deductions, if he cancels the coverage and surrenders the policy to the insurance company. Usually, before a policy can acquire cash surrender value, specified minimum number of premiums shall have been paid.
Claim
A request for payment under the terms of an insurance policy on the happening of specified events or after the expiry of specified period.
Commission
A percentage of an insurance premium paid by the insurer to an insurance intermediary like an insurance agent or broker for selling insurance policies.
Compound reversionary bonus
The additional bonus earned by the accumulated bonus on a policy apart from the bonus on the basic Sum Assured.
Concealment
Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Conditions
The clauses inserted in an insurance contract that must be satisfied before the life insurance coverage becomes effective or before the insurer becomes liable to perform his part of the obligations under an insurance contract.
Coverage
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Date of Policy Commencement
The date on which the policy was actually accepted and the initial deposit is converted to first premium. This is the date from which the insurance company accepts the risk on the life of the assured.
Death Benefit
The benefit (amount) that a designated beneficiary/nominee is eligible to receive, as per the insurance Policy, upon the death of the life assured. The benefit may include the original or basic policy death benefit, dividends, and supplemental benefits as reduced by any outstanding policy loans, loan interest, prior policy withdrawals etc. as applicable.
Declarations
Statements in an insurance contract that provide information about the property or life to be insured and which may be used for underwriting and rating purposes and identification of the property or life to be insured.
Disability Benefit
A feature added to some life insurance policies providing for waiver of premium, or payment of monthly income, or other benefits if the policyholder becomes totally and permanently disabled, as provided in the policy.
Dismemberment Insurance
A form of insurance that provides payment of certain benefits in case of dismemberment.
Disposable Personal Income
The personal income less personal tax and non-tax payments that is available for spending and saving is usually referred to as disposable personal income of a person.
Dread Disease Insurance
Insurance providing an unallocated benefit, subject to a maximum amount, for expenses incurred in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis and spinal meningitis, as provided in the policy.
Effective Date
The date on which the policy was actually accepted and the initial deposit is converted to first premium. This is the date from which the insurance company accepts the risk on the life of the assured.
Earned Income
Income earned by a person, be it salary, wages, commission or fees, out of any lawful economic activity.
Endorsement
An amendment to an insurance policy or a noting in the insurance policy that becomes part of the insurance contract. The endorsement usually expands or limits the benefits payable.
Endowment
A type of Life insurance wherein the sum assured is payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date.
Evidence of Insurability
Any statement or substance of a persons physical condition and/or other factual information affecting his/her acceptance for insurance.
Exclusion
Conditions or circumstances expressly provided in the policy document for which the policy provides no benefits.
Exception
Conditions or circumstances expressly provided in the policy document for which the policy provides no benefits.
Grace Period
The length of time after a premium is due and unpaid during which the policy, including riders or add-on benefits, remains in force.
Guaranteed Addition
This is not an add-on or a rider. Guaranteed addition is an additional sum that the insurance company guarantees to pay the life assured or his nominees upon the happening of certain events. This sum is in addition to the sum assured payable under the basic cover. This term must not be confused with Bonus, which is payable only in with-profit policies and only when the insurance company declares its surplus to the policyholders. Bonus cannot be claimed as a matter of right. However, a Guaranteed Addition can be claimed as a matter right by life assured or beneficiary.
Hazard
Condition that creates or increases the chance of loss.
Insurance
Insurance is a contract by which one party (the insurer) in consideration of the price paid to him (called premium) agrees to indemnify or pay a certain sum of money to the other (called the insured) on the happening of perils specified in the policy.
Insured
The person on whose life the policy is issued.
Insured Life
The person on whose life the policy is issued.
In Force
An insurance policy is "in force" from its start date until the date it is terminated.
Joint Life
An insurance contract where two people are insured against death.
Keyman Insurance
Also known as keyperson insurance. Cover designed to protect or compensate a business in the event of the death or incapacity of an important employee regarded as crucial to that organisation.
Lapse
The termination of the contract of insurance as a consequence of failure to pay up the renewal premium before the specified time.
Medical Examination
The examination conducted by a qualified physician to determine the insurability of a life to be insured. A medical examination may also be used to determine whether a person claiming disability is actually disabled.
Mode of Payment
The method of making payments towards the risk covered under an insurance policy. For example, monthly, quarterly, half-yearly, and annually.
Moral Hazard
Moral Hazard is generally referred to as the risk on the life of a person due to the particular circumstances in which that life is placed; it could be simply due to the position (such as a politician), or by virtue of a person being involved in activities that are illegal or immoral or unhealthy in nature.
Mortality Table
A statistical table showing the death rate at each age, usually expressed as so many per thousand.
Non-forfeiture Option
The various ways in which a policy owner may apply the cash value of a life insurance policy if the policy lapses, so that the policy remains valid.
Non-medical Limit
The maximum face value of a policy that an insurance company will issue without the life to be insured taking a medical examination.
Non-participating Policy
Non-participating Policy is one that is not entitled to share in the surplus of the insurance company.
Occupational Hazards
Occupations which exposes the insured life to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected due to the nature of the occupation.
Proposal
A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application is the basis of the insurance contract when the policy is issued.
Paid-up Insurance
Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a non-forfeiture option, after the policy has acquired some cash value.
Participating Policy
Participating Policy is one that participates in the surplus of the insurance company.
Policy
The legal document issued by an insurance company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract or insurance policy.
Policy Holder
The person to whom a policy has been issued.
Policy Loan
A loan given by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
Policy Term
Period for which an insurance policy provides coverage. In some policies, the benefit becomes payable at the end of the Policy Term, if the specified event has not occurred.
Premium
The amount payable by the policyholder to the insurance company for effecting an insurance policy or keeping the same in force.
Premium Paying Period
Period for which the premium has to be paid in relation to a policy. The Premium Paying Period could be same or less than the Policy Term.
Reversionary Bonus
The bonus declared by the insurance company which is attached to the policy and becomes payable on death or on maturity.
Rider
A supplementary benefit that becomes part of basic insurance contract and expands the scope of benefits available under a policy.
Sum Assured (SA)
Amount payable when specified event occur or at the expiry of a specified period, under an insurance policy.
Underwriting
Process of deciding whether or not a policy is issued and if accepted for policy then at what rate of premium and the type of cover.
Underwriting Profit
The difference between insurance premiums earned and claims and expenses paid over a given period. If premiums are the higher figure, there is an underwriting profit; if they are lower, there is an underwriting loss. Underwriting profit excludes investment income, so is a commonly used method of evaluating the performance of a general insurance company.
Unearned Premiums
Premiums received by an insurer relating to cover provided outside the current accounting period. Such premiums are not normally treated as income until they have been "earned" during the period to which they relate.
Vesting Age
This is the age when the rights under the policy vests with the name individual.
Variable Rate
An interest rate that fluctuates or is periodically reset.
Volatility
The variable amount by which a share price or market value rises and falls during a period of time.
Venture Capital
A specialist form of high-risk financing provided for small, new companies by speculative investors.
Volume
The total number of shares traded (bought and sold) in a given period
Whole Life Insurance
An insurance contract where the benefit is payable on death, whenever it occurs. Distinct from term insurance, which pays out only if death occurs within a specific period.
With Profit
A type of investment plan in which extra amounts may be added to the main benefit (known as the sum assured) to reflect profits earned during the course of the contract. Regular or "reversionary" bonuses may be added, usually each year, and once declared are guaranteed. A final or "terminal" bonus may be added when the policy becomes payable. With-profit funds are typically invested in a mixture of equities, property and fixed income investments. Under poor stock market conditions a "market value adjustment" (MVA) may be applied to the value of the policy if it is surrendered before the maturity date.
Yield
Rate of return on an investment in percentage terms, taking into account annual income and any change in capital value. Also the dividend payable on a share expressed as a percentage of the market price.
Yield To Maturity (YTM)
Yield to maturity is the rate of return expected if a bond or other dated investment is held for the full term of the contract, or until the maturity date.
YTD
Abbreviation for "year to date". Usually means the period starting 1 January of the current year and ending today.
Zero Coupon Bond
A bond that does not pay interest and matures at face value. It provides an investment return normally by being bought at a discounted price.
Zero Dividend Preference Share
A share that pays no, or "zero", dividends. Instead, it is bought at one price and redeemed later for a higher price agreed in advance.