LIC Terminology

Glossary of LIC Terminologies 

Here is a list of some commonly used LIC terminologies.

1. Accident Benefit

   An additional benefit is paid if the policyholder suffers accidental death or disability during the policy term. It enhances the death benefit and may also provide a waiver of future premiums in case of disability.

2. Age Limit

   The minimum and maximum age at which a person is eligible to buy a specific LIC policy. Different plans have different entry and maturity age limits based on the nature of coverage.

3. Agent

   An LIC agent is a certified representative who helps customers choose suitable insurance plans, assists in policy servicing, and facilitates claims. Agents are the primary link between LIC and its policyholders.

4. Annuity Plans

   Annuity plans are pension-based insurance policies that provide regular income to the policyholder after retirement. LIC’s annuity plans are designed to ensure financial security in the post-retirement phase.

5. Assignment

   Assignment is the legal transfer of rights under a policy from the policyholder to another person or institution. It is commonly done for loans or as a gift.

6. Application Form

   The application form is the document filled and signed by the proposer to apply for an LIC policy. It includes personal, health, and financial details required to underwrite the policy.

7. Beneficiary

   A beneficiary is the person named in the policy to receive the benefits upon the death of the life assured. The beneficiary can be a family member, legal heir, or nominee.

8. Coinsurance

   Coinsurance is a shared cost arrangement where the insured and the insurer each pay a portion of the covered expenses. It is more commonly used in health insurance-related products.

9. Convertible Whole Life Policy

   This is a policy that begins as a whole life plan but can be converted into an endowment policy after a certain period. It offers flexibility to adapt to changing financial goals.

10. Coverage

    Coverage refers to the financial protection provided by the policy for specific risks like death, disability, or illness. The extent of coverage depends on the plan and sum assured chosen.

11. 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.

12. 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.

13. Deferment Period

    The deferment period is the time between the policy start date and when the annuity payouts begin. It is commonly associated with pension or retirement plans.

14. Endowment Policy

    An endowment policy is a life insurance plan that pays a lump sum on maturity or death, whichever occurs first. It combines insurance protection with savings.

15. Exclusions

    Exclusions refer to conditions not covered under the terms and conditions of life insurance policy. For example, most LIC policies do not cover deaths due to suicide within the first year.

16. Family Insurance

    Family insurance plans cover multiple members under a single policy, offering convenience and cost-effectiveness. They may include term or health riders for spouse and children.

17. 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.

18. 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.

19. Group Life Insurance

    A group life insurance policy provides life cover to a group of individuals under a single master policy. It is often offered by employers to their employees as part of a benefits package.

20. Indemnity

    Indemnity is the principle of restoring the insured to the financial position they were in before a loss occurred. It applies more to health and general insurance than to life insurance.

21. Insurable Interest

    Insurable interest refers to the legal right to insure someone’s life or property, based on a financial or emotional relationship. It must exist at the time of policy purchase.

22. Insurability

    Insurability is the assessment of a person’s eligibility to be insured based on their health, age, and lifestyle. LIC evaluates this through underwriting before issuing a policy.

23. Lapsed Policy

    As per the terms and conditions of life insurance policy, the policy lapses if premiums are not paid even after the grace period, meaning it will no longer provide coverage.

24. 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.

25. Limited Payment Policy

    This is a policy where premiums are paid for a limited number of years, but the coverage continues for the full policy term or for life. It offers financial flexibility and long-term protection.

26. Loyalty Additions

    Loyalty Additions are non-guaranteed bonuses declared by LIC on certain plans after the policy has been in force for a minimum number of years. They enhance the total payout on maturity or death.

27. 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.

28. Maturity Claim

    A maturity claim is the request made by the policyholder to receive the policy benefits at the end of the policy term. It requires submission of the policy document and identity proof.

29. Money Back Policy

    A money-back policy is a type of endowment plan that pays periodic survival benefits during the policy term and the remaining sum assured at maturity or on death.

30. Nomination

    Nomination is the act of naming a person to receive the policy benefits in case of the policyholder’s death. It ensures smooth claim settlement without legal complications.

31. 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.

32. 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.

33. 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.

34. 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.

35. 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.

36. 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.

37. Premium Back Term Insurance Plans

    These are term plans where the premiums paid are returned to the policyholder if they survive the policy term. It offers protection along with a refund feature.

38. Reinstatement

    Reinstatement is the process of reviving a lapsed policy by paying overdue premiums and fulfilling health requirements. LIC allows reinstatement within a specific period from the date of lapse.

39. 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.

40. 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.

41. 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.

42. 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. As per the terms and conditions of the life insurance policy in LIC, you can surrender a policy after 1 year of premium payment. 

43. Survival Benefit

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

44. 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.

45. Vesting Age

    Vesting age is the age at which a pension or annuity plan begins to pay out benefits. LIC’s retirement plans often have a minimum vesting age of 40 or 50 years.

46. Whole Life Policy

    A whole life policy provides life cover for the entire lifetime of the life assured, rather than a fixed term. It offers long-term protection and builds cash value over time.

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 be aware of the complexities of LIC products and terms and conditions of life insurance policy so you can manage your insurance needs more effectively. 

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