The Investment Multiplier

Insurance FAQ

Q) What is Proposer?

A) Any individual who want to buy an insurance is a proposer. According to what he wants to buy, he fills the form and pays his first premium. Once this is done, he has entered in a contract with the insurer and his risk cover begins.

Q) What is life assured/Insured?

A) Life assure or life insured is the basic and the most important matter of an insurance contract. The life of the proposer is insured by the insurer and on his death, the nominee of the proposer receives all the insured funds

Q) What is policy/Policy document?

A) It is a written evidence of the contract between the proposer and the insurer. The evidence contains the details of the proposer and what insurance he has purchased and also the terms and conditions of the insurance policy.

Q) What is sum assured?

A) Sum assured is the fixed amount that the insurer pays to the proposer at maturity, or to the nominee at the death of the proposer, as mentioned in the policy document.

Q) What is a premium?

A) Premium is the amount that the proposer pays to the insurer, either as a lump sum, or in regular installments to get covered over risk of death.

Q) What are the death benefits?

A) The death benefits relate to the amount that the nominee gets as sum assured at the death of the proposer along with accumulated bonuses.

Q) What are maturity benefits?

A) Maturity benefits are the benefits the proposer gains when the insurance matures. He gets the sum assured along with accumulated bonuses.

Q) What are survival benefits?

A) Just like maturity benefits, survival benefits also assure sum assured to the proposer along with accumulated bonuses.

Q) What is a Bonus?

A) The insurance company shares the profits it has from business with the proposer in form of bonus. The amount of bonus proposer gets is a percentage of his sum assured, depending on the insurer. However, the bonus is granted along with the sum assured at maturity or death of the proposer.

Q) what are rider premiums?

A) Riders are the added benefits for the proposer. Benefits like critical illness, waiver of premiums and accidental death benefits. Riders are an extension of your base policy which require you to pay additional premiums in order to avail them. These are called rider premiums.

Q) What is grace period?

A) Grace period is an extension of 15 days for payment of the premium for monthly premium plans and an extension of 30 days for other payment modes from the due date of the premiums.

Q) What is a free look period?

A) 15 days from the date of receipt of an insurance, the proposer can review his decision of the insurance plan he has opted for. This period where the proposer can review his decision is called the free look period.

Q) What is revival?

A) If the proposer is unable to pay the premium of the insurance even after the grace period, the insurer can terminate his policy. In such cases, the proposer can revive his plan by showing documents to prove that he will sustain all the future premiums. This process is called revival

Q) What is suicide clause?

A) Within 1 year of the insurance, if the proposer commits suicide, the contract between the proposer and the insurer automatically ends. The insurer only needs to pay 80 percent of the premiums paid. The insurer is not liable to pay the sum assured.

Q) Nominees, Nominations and endorsements. What are these?

A) Under section 39 of the insurance act, the proposer must appoint a nominee who would be entitled to all the policy benefits at the death of the proposer. Once all the payments have been made to the nominee, the insurance contract automatically comes to an end.

Q) What are the five types of life insurances?

A) Five types of life insurances are

  • Whole life plan
  • Endowment plan
  • Term plan
  • ULIP
  • Money back plan

Q) What is Whole life plan?

A) Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called “straight life” or “ordinary life,” is a life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime, provided required premiums are paid, or to the maturity date.

Q What is endowment plan?

A) An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its ‘maturity’) or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.

Q) What are term plans?

A) Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.

Q) What is ULIP?
A) A Unit Linked Insurance Plan(ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan.

Q) What are money back plans?

A) The money-back policy from Life Insurance Corporation in India is a popular insurance policy. It provides life coverage during the term of the policy and the maturity benefits are paid in installments by way of survival benefits in every 5 years. The plan is available with 20 years and 25 years’ term.

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