Nominee
A nominee is an individual who receives the benefits from your life insurance in the event of your passing while the policy is active. You have the flexibility to designate anyone, such as your spouse, children, parents, or siblings, as your nominee. Additionally, you have the option to select one or more nominees and determine the distribution of the funds among them by assigning percentages. While your policy is still active, you can add, remove, or change nominees by asking the insurance company to make the changes.
Appointee
This is the person you choose and authorise to get the benefits from your policy on behalf of your nominee if they're under 18 years old when the claim is paid.
Policyholder
The policyholder is the individual who owns or purchases the insurance policy. Only the policyholder has the authority to make changes to the life insurance contract and is responsible for paying the premiums, which represent the cost of the insurance.
Life Assured
The “life assured” is the individual whose life is insured under the insurance contract. It's the person for whom the policy is purchased to mitigate the risk of premature death.
Important Note: The life assured and the policyholder may or may not be the same individual in a life insurance policy. If they are the same, the individual whose life is insured owns the policy and pays the premiums. If they are different, the individual whose life is insured differs from the policy owner. For instance, a husband may purchase a life insurance policy for his wife, who is a homemaker. In this scenario, the wife, unable to pay her premiums, becomes the life assured, while the husband acts as the policyholder.
Grace Period
The Grace Period is akin to a small extension offered by the insurance company for paying your life insurance premiums. There may be occasions when you are unable to make the payment by the due date, but with the Grace Period, you can catch up without risking the loss of your life cover. However, if you fail to make the payment within this additional time frame, your policy will lapse, and you will forfeit the associated benefits. The grace period for premium payments is 15 days for the monthly mode and 30 days for the annual, semi-annual, or quarterly modes.
Free-Look Period
If you ever decide to cancel your life insurance plan for any reason, you have the option to receive a refund of the premiums paid. Within a 15-day Free-Look Period, which commences upon receipt of your policy document, you can choose to cancel the policy. During this period, the insurer will refund the full premium amount, deducting minor charges such as administration and stamp duty fees.
Revival Period
Every life insurance policy has a termination date. Once it expires or is discontinued, you become ineligible for any benefits. However, there's an opportunity to reinstate it during the Revival Period, provided by insurance companies after the grace period. Typically lasting for 5 years from the date of the initial missed premium, this period allows policyholders to revive their lapsed policies.
Lump Sum Payout
With this choice, your family gets the entire claim amount all at once. After the claim process is done, the insurance company transfers the whole sum directly to your nominee's bank account. However, be cautious – if your family isn't familiar with handling significant sums, there's a risk they might make unwise investment decisions.
3-Year Claim Payout
According to Section 45 of the Indian Insurance Act, if you've maintained your term insurance policy for three consecutive years and have paid all your premiums on time, the insurance company cannot deny any death claim. This means no questions can be raised about fraud, misstatement, or hiding information, providing assurance that your family will receive the claim amount.