A life insurance policy has several components and elements which are not commonly known to many people. If you are considering to buy a policy, it can be difficult to understand the concepts if you are not aware of certain terms. So, before you choose to get a plan, let’s run through the terms to make it easy for you.

Insurance Terms That You Should Know About

There are various terms that are associated with life insurance of which some are given below:

1.   Free-look Period

When you buy a life insurance policy, the insurers give you a feature called free-look period. It is a period during which you can return the policy if you do not like the benefits and don’t agree with certain exclusions and terms. If you end up returning the policy, the premium amount will be refunded to you after deducted certain charges like stamp duty and medical test amongst others. The IRDA (Insurance Regulatory and Development Authority) specifies the free-look period to consist of 15-30 days since purchase.

2.   Surrender Value

If you discontinue the insurance plan before the policy term ends, the insurer will pay you the surrender value of the plan. It is advised to check the surrender value of the life insurance throughout the policy term beforehand and read the terms and conditions related to it.

3.   Grace Period

The grace period is a duration given to you to pay your premium if you miss the payment date. This period consists of 15 days for a monthly premium frequency and 30 days for annual payment frequency. The insurance policy lapses if you do not pay the outstanding by the end of the grace period.

4.   Riders

Riders are add-ons that can be combined with your insurance plan to increase your coverage. There are several insurance riders that you can buy to cover unfortunate situations like accidental death or loss of income amongst others.

5.   Underwriters

Underwriters as appointed by the insurance providers to analyze the risk related to a policyholder. They play a vital role in determining the premium quote for you after considering aspects like gender, health record and lifestyle habits amongst others. They also look after the claim process and settlement.

6.   Exclusions

Every insurance policy and the rider benefits have exclusions that are not covered by the insurer. It is advised to thoroughly read the exclusions section before buying a term plan.

7.   Revival Period

If you fail to pay your premium on time and also end up missing the grace period, your policy lapses. But you have another shot at recovering your life insurance policy. This is called the revival period during which you are allowed to revive your lapsed policy after paying your outstanding premiums and interest.

8.   Tax Benefits

When you buy an insurance plan, you get tax benefits under certain provisions like Section 80C and Section 10(10D). You are able to claim the premiums paid for a term policy under Section 80C with a maximum cap of INR 1,50,000 per financial year. Also, the death benefit received can be availed as tax-free by claiming it under Section 10(10D).