LIC Terminology

1. Premium

   The premium is the amount you must pay to obtain LIC insurance coverage. While premiums may vary depending on the type of policy, they generally remain consistent throughout the policy term.

2. Premium Payment Mode

   LIC offers premium payment modes, including monthly, quarterly, semi-annual, and annual options, allowing policyholders to choose the one that best suits their financial planning.

3. Premium Payment Term

   This term refers to the period during which the policyholder must pay premiums. Depending on the policy, payment options include single, limited, or regular premium terms.

4. Policy Term

   The policy term is the duration for which the insurer provides coverage and benefits. Most policies allow you to select the term, which can often be extended with whole-life policies up to 99 or 100 years.

5. Claim Amount

   The claim amount is the benefit the policyholder or their beneficiaries are entitled to receive. It includes the death benefit in case of a claim and the maturity amount upon policy completion.

6. Death Benefit

   Also known as the life cover amount, the death benefit is the sum payable upon the policyholder’s death during the policy term. This amount may include the sum assured, rider benefits, and applicable bonuses.

7. Exclusions

   Exclusions are specific conditions or circumstances under which the policy does not provide coverage. For example, most LIC policies do not cover deaths due to suicide within the first year.

8. Free Look Period

   This is the period immediately following the issuance of a policy during which the policyholder can review the policy details. If dissatisfied, the policyholder can return it within this period (usually 30 days for online policies and 15 days for offline policies) and receive a refund of the premium minus any nominal charges.

9. Grace Period

   The grace period is the extra time to pay premiums after the due date. Typically, LIC offers a 15-day grace period for monthly premiums and 30 days for other payment modes, allowing policyholders to avoid policy lapse.

10. Lapsed Policy

    The policy lapses if premiums are not paid even after the grace period, meaning it will no longer provide coverage.

11. Life Assured

    The life assured is the individual covered under the policy. In policies purchased for oneself, the policyholder and life assured are the same person. For child plans, the policyholder is the parent, while the child is the life assured.

12. Maturity Benefit

    This is the amount payable to the life assured upon surviving the policy term. It can be a fixed sum assured or a variable amount based on the type of policy. In LIC policy, it refers to the return of premiums paid throughout the policy term at maturity.

13. Nominee

    The nominee is the person designated by the policyholder to receive the death benefit in case of the policyholder's death during the policy term.

14. Paid-up Benefit

    Some policies offer a paid-up benefit, where if premiums are not paid after a certain period, the policy will continue with a reduced sum assured based on premiums already paid, rather than lapsing.

15. Revival Period

    After a policy lapse, the revival period allows the policyholder to reinstate it by paying the outstanding premiums and any applicable interest. This often requires a new medical assessment.

16. Riders

    Riders are benefits that can be added to a base policy for enhanced coverage. Common riders include critical illness riders, accidental death benefit riders, and waiver of premium riders.

17. Sum Assured

    The sum assured is the amount the insurer guarantees to pay in case of the policyholder’s death or other specified events. For instance, if a policy has a sum assured of ₹50 lakhs, that amount will be paid to the nominee upon the policyholder’s death.

18. Surrender Benefit

    If the policyholder decides to terminate the policy before its maturity, they can receive the cash value accumulated up to that point, known as the surrender benefit. The policy will terminate after this payment.

19. Survival Benefit

    Some policies offer periodic survival benefits for outliving specific policy years. This benefit may include any applicable bonuses.

20. Tax Benefits

    Life insurance policies in India offer tax benefits under sections 80C, 80D, and 10(10D) of the Income Tax Act of 1961. These benefits are subject to changes in tax laws.

Summing It Up:

Understanding these terms will help you navigate LIC policies more effectively, ensuring you make the most of your insurance coverage. Whether you’re a new policyholder or looking to review your existing policies, familiarity with these terms will help you navigate the intricacies of LIC products and manage your insurance needs more effectively.