Do you understand what are you planning to buy?
If not read this so next time someone comes to sell, you ask him certain more details
Single premium policy - A policy which will need you to pay just one lump-sum amount.
Annual premium policy- A policy which will require you to pay every year.
Sum assured- It is the amount of money an insurance policy guarantees to pay before any bonuses are added. In other words, sum assured is the guaranteed amount you will receive.
Maturity value- It is the amount the insurance company has to pay you when the policy matures. This would include the sum assured and the bonuses.
Bonus-This is the amount given in addition to the sum assured.
Reversionary bonus- It is a bonus that is added to policies throughout the term of the policy. It may or may not be declared every year. When it is declared, it will not be given to you immediately.
With profit bonus- This is linked to the profit of the company. If the company makes a profit, it declares a bonus in accordance with the profits. The profits are added to your insurance policy and given to you either on maturity of the policy or to your nominee if death occurs before that.
Guaranteed bonus-This is part of the sum assured. It will be paid to you irrespective of the profits of the company.
Term insurance-It provides policyholder with protection only. If the policyholder dies within the specified number of years (the term), his nominee gets the sum insured. If he lives beyond the specified period, the policyholder gets nothing.
This is the cheapest and most basic type of life insurance.
Endowment Insurance-You are given a life cover just like term insurance. If you die during this period, your beneficary will get whatever amount you are insured for. Unlike a term insurance cover, if you live, an amount will be paid to you on maturity of the plan.This kind of policy combines saving (because money is given to you on maturity) with some protection (your nominee gets an amount if you die).
Rider-It is an optional feature that can be added to a policy.
For instance, you may take a life insurance policy and an add on accident insurance as a rider. You will have to pay an additional premium to avail this benefit.
Annuity-This refer to the regular payments the insurance company will guarantee at some future date. So, say, after you cross 52, the insurance company will start giving you a monthly or quarterly return.This is often done to supplement income after retirement.
Surrender Value-Halfway through the policy, you might want to discontinue it and take whatever money is due to you. The amount the insurance company then pays is known as the surrender value. The policy ceases to exist after this payment has been made. Do remember, you will lose out on returns if you withdraw your policy before time.
Paid-up value-is different. If you stop paying the premiums, but do not withdraw the money from your policy, the policy is referred to as paid up. The sum assured is reduced proportionately, depending on when you stopped. You then get the amount at the end of the term.
ULIP Policy- This refers to policy where part of your funds are invested in stock market and your returns are based on how your insurance company has invested your money in the stock market.This type of insurance are referred as Investment plans.
Tax saving plans- These set of policies are referred to policies which individual buyes to save tax.They have lock in period for such Policies.
I assume there are other 100 terms of Insurance and hope other keep adding to this list.This list will increasing day by day as new plans/ trends keep coming up the Insurance sector.
SO watch out for this section with keen interest.
