Common Life Insurance Terms You May Want to Know Part 1

 A life insurance plan is a long-term contract between you and the insurance company.  So, it will be beneficial for you to understand fully terms commonly used in such contract.

Policyholder is a person or an entity who owns an insurance policy. The policyholder is often, but not always, the life insured, and may or may not be one of the policy’s beneficiaries. The policyholder can exercise the rights stated in the contract as well as fulfilling obligations, such as paying the premiums.

Life assured refers to the person whose life is being insured against specified contingencies (e.g. death, accident, disability) in an insurance contract.

Beneficiary is the person or entity entitled to receive the claim amount upon the death of the life assured or on the maturity of the policy.

Premium is an amount the policyholder pays to the insurance company for covering the insured events. Premium may be payable one time or, more commonly, payable regularly (e.g. monthly, annually) throughout the duration of the insurance contract.

Premium payment mode refers to how often a policyholder pays premium. Premium may be paid monthly, quarterly, half-yearly, annually or even just one time.

Sum assured is the guaranteed amount of money an insurance policy will pay out when an insured event happens to the life assured (before any bonuses are added).

Maturity benefit is the amount a policyholder receives when a policy comes to the end of its term. An insurance policy needs to be in force (e.g. up to date with premiums) to avail these maturity benefits.

Insurance period is the period of coverage provided by an insurance policy.

Effective date is the specific date that an insurance policy goes into effect. It is the date on which each party whose responsibilities or benefits start, as insurance coverage does not necessarily begin upon purchase.

Maturity date is the date on which the insurance policy finishes, and the maturity benefit is paid out to the beneficiary.

If you have any question, please send it to info@prudential.la