Insurance Jargons – Don’t be Confused

Insurance is an intricate product and so is its terminology. While going through a policy docket, we come across certain terms that we too often mix with each other. We have taken a vow to bust such confusing jargons once and for all. Take a quick look!

Read more
Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
Tax Benefit
Upto Rs. 46800
Life Cover Till Age
99 Years
8 Lakh+
Happy Customers

*Tax benefit is subject to changes in tax laws. *Standard T&C Apply

** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines

Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
+91
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Further in this article, we have elaborately discussed everything you need to know about COVID_19 and life insurance.

(1). Beneficiary vs Nominee

Beneficiary is the person(s) or entity(ies) supposed to get the insurance proceeds when the insured dies. Nominee is the person supposed to receive the insurance proceeds when the insured dies. Note that the two differ in the definition just by one word, nominee receives the proceeds but need not necessarily be able to use it. A nominee is not the owner, rather the nominee's primary role is to manage the death proceeds and hand it over to the beneficiary. The beneficiary on the other hand is a default owner in the case of demise of the insured.

Beneficiary can be parents, spouse, siblings, children, or institutions. Nominee can be your immediate family member or non-family member who is close enough and can be trusted to hold and pass the proceeds to insured's legal heirs.

(2). Sum Assured vs Sum Insured

Sum Assured is the pre-defined amount, agreed upon by the insurer and the insured, to be paid in case of an eventuality. Life insurance works on sum assured. For instance, If the sum assured is Rs 5 lakh and the insured suffers an eventuality, death or disability, as the case may be, the beneficiary will be paid out a lump sum of Rs 5 lakh.

Sum Insured is the upper limit of the payout that the insurance company is liable to pay to the insured in case of an eventuality. Thus, sum insured follows the principle of indemnity which states that the insurer is to compensate the loss of the insured so as get him restored to his financial position. Non life insurance such as car insurance, health insurance, and home insurance works on sum insured. For instance, the sum insured is Rs 2 lakh under a car insurance, if the insured had an accident and had to bear a financial loss of Rs 1 lakh, his insurance company is liable to pay him Rs 1 lakh. However, if the insured suffers a loss of Rs 3 lakh, the insurance company will be paying him Rs 2 lakh that is the maximum limit of liability and the rest 1 lakh will have to be paid by the insured out of the pocket.

(3). Agent vs Aggregator

An insurance agent is a sales representative of an insurance company. Agents pitch the best features of their products and try to mould them to the insured's need. Agents receive commission from the insurance company when they sell an insurance plan to the buyer.

Aggregator on the other hand acts a kind of platform for the buyer to see and compare a number of plans fitting his specific needs. The comparison can be made on the basis of premium, coverage or exclusions. Unlike agents, aggregators do not receive any commission from the insurance companies and hence provide an unbiased comparison. Insurance aggregators save you effort, time, energy and money and you get the insurance product most suited to you.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

(4). Co-pay vs Co-insurance

Both co-pay and co-insurance are a kind of out-of-pocket expenses that have to be borne by the insured when a claim is filed. The difference between the two is that while co-pay is a fixed sum that has to be paid while availing services, co-insurance is a fixed percentage of the total claim amount.

To get the difference clearer, take a look at the example given below:

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

 

Plan A with Co-Pay of Rs 1000 on one day hospitalization

Plan B with Co-Insurance of 20% on one day hospitalization

 

Billed Amount - Rs 2000

Billed Amount - Rs 6000

Billed Amount - Rs 2000

Billed Amount - Rs 6000

Insured Pays

Rs 1000

Rs 1000

Rs 400

Rs 1200

Insurance Company Pays

Rs 1000

Rs 5000

Rs 1600

Rs 4800

Written By: PolicyBazaar

Life insurance articles

Recent Articles
Popular Articles
How to Cancel SBI Life Insurance Policy?

18 Nov 2021

As per the Insurance Regulatory and Development Authority, you...
Read more
Max Life Insurance 1 Crore Plan

14 Oct 2021

With many novel diseases surfacing, life seems to be fleeting...
Read more
Life Insurance for Senior Citizens Over 70

14 Oct 2021

Although you may be past the opportunity to buy life insurance...
Read more
Life Insurance for Senior Citizens over 80

14 Oct 2021

If you are the bread earner for your family, no time is bad to...
Read more
Life Insurance for Armed Forces

14 Oct 2021

The Indian arm forces are our pride. They risk their lives to...
Read more
How to Check LIC Policy Status, Details, Statement via Online/SMS/Call
Last year, Mr. Rajiv Verma bought a Child LIC policy to provide financial security for his kid's future. However...
Read more
Surrender Value in Insurance
Surrender Value in Insurance Have you bought a life insurance policy which is not as per your requirement? Are you...
Read more
LIC Login: LIC Customer Login Process at Online Portal
The LIC login portal is user-friendly. With the LIC online login facility, customers can easily avail themselves of...
Read more
How to Check PLI Status?
How to Check PLI Status? Dating back to February, 1884, PLI (Postal Life Insurance) is one of the oldest life insurers...
Read more
Life Insurance: Checking Policy Status
Life Insurance: Checking Policy Status Buying life insurance policy is the first step towards building a corpus amount...
Read more
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL