Odisha CHSE +2 Vocational Insurance key terms

The chance of loss or harm arising from an uncertain future event. In insurance, risk is the possibility that a defined adverse event may occur and cause financial damage to a person or property.

A risk that involves only the possibility of loss or no loss, with no chance of gain. Insurers normally accept pure risks such as fire, theft or premature death, because they are measurable and accidental.

A risk that carries the possibility of either gain or loss, such as trading in shares or starting a business. Such risks are generally not insurable because the loss is not accidental and cannot be reliably measured.

A legal and financial relationship under which a person benefits from the continued existence of the subject matter and suffers loss if it is damaged. It must exist when the policy is taken and, in life insurance, also at the time of claim.

The duty of both the proposer and the insurer to disclose all material facts honestly and completely. Failure by the proposer can allow the insurer to avoid the contract, so questions in the proposal form must be answered truthfully.

Any information that would influence a prudent insurer's decision on whether to accept a risk, what premium to charge, or what terms to impose. Examples include age, occupation, health history and past claim record.

The failure by a proposer to reveal a material fact that the insurer needed for underwriting. It may be innocent, negligent or deliberate, and the insurer's remedy depends on the nature of the omission.

A statement of fact made by the proposer that is false or misleading. If the false statement is material, the insurer may avoid the contract or apply other remedies permitted under the policy and law.

The principle that the insured should be restored, as far as money can, to the same financial position as before the loss, without profit. It applies to most general insurance but not to life insurance.

The right of an insurer, after paying a claim, to step into the insured's legal position and recover the loss from the party responsible. It supports the principle of indemnity by preventing double recovery.

The right of an insurer to recover a share of a loss from other insurers that also cover the same interest. Each insurer pays its rateable proportion, so the insured cannot recover more than the actual loss.

The dominant, effective and direct cause of a loss, as opposed to a remote cause. Claim settlement depends on identifying the proximate cause and checking whether it is covered or excluded by the policy.

The amount paid by the policyholder to the insurer in return for cover. It is calculated from the sum insured or sum assured, the applicable rate, and factors such as age, risk class and policy term.

The guaranteed amount payable on the happening of the insured event in a life insurance policy, such as death or maturity. It forms the basis for calculating premium and benefits under the contract.

The maximum amount an insurer will pay for a loss under a general insurance policy. It represents the value of the insured subject matter and is the basis for premium calculation.

The amount of each loss that the insured must bear before the insurer pays. It removes small claims, keeps premiums lower and makes the insured share responsibility for the risk.

A stated amount or percentage deducted from a claim payment, or a condition requiring the insured to bear the first part of any loss. Compulsory and voluntary excess clauses are common in motor insurance.

A discount on renewal premium allowed in motor insurance when the policyholder makes no claim during the preceding policy year. It rewards careful driving and is forfeited if a claim is made.

The continuation of an insurance policy for a further period after its expiry, usually on payment of a fresh premium. Renewal keeps the cover alive, and delay may require fresh underwriting or a waiting period.

The extra time allowed after the due date for payment of a life insurance premium, during which the policy remains in force. If the premium is paid within this period, risk cover continues without interruption.

The state of a life insurance policy when premiums are not paid within the grace period and the policy ceases to provide cover. A lapsed policy may be revived on conditions set by the insurer.

The restoration of a lapsed life insurance policy to full force by payment of arrears and interest, and usually by providing evidence of good health. Revival is subject to the terms of the policy.

The amount payable by an insurer when a policyholder voluntarily terminates a life insurance policy before maturity, provided premiums have been paid for the required period. It is usually lower than the total premiums paid.

The reduced sum assured that a life policy acquires when premiums stop after a minimum period, without the policy being surrendered. The original policy term continues, but the sum assured is reduced.

The amount paid to the policyholder when an endowment or money-back policy completes its full term and all premiums are paid. It typically includes the sum assured plus any accrued bonuses.

The right of a policyholder to name a person who will receive the policy money in the event of the policyholder's death. A nominee is a trustee for the legal heirs and does not automatically become the owner.

The transfer of the rights and benefits of an insurance policy to another person or entity, either absolutely or conditionally. It is commonly used when a policy is pledged as security for a loan.

Legal liability of the insured towards other persons for death, bodily injury or damage to their property, which the insurer agrees to pay under a liability policy. Motor insurance must cover third party liability by law.

Loss or damage to the insured's own vehicle, covered under a motor package policy. Own damage cover is optional, unlike mandatory third party liability cover for motor vehicles.

The process by which an insurer assesses a proposed risk and decides whether to accept it, on what terms, and at what premium. It relies on information from the proposal form, medical reports and past records.

The method of calculating the premium for a given risk using rate tables, risk classification and loadings or discounts. Correct rating ensures that each class of risk pays its fair share of claims.

The increased chance of loss caused by the insured's own attitude or conduct, such as carelessness because insurance exists. Underwriters try to control moral hazard through deductibles, exclusions and claim scrutiny.

A formal request by the insured or nominee for payment of benefits under a policy after an insured event occurs. It must be supported by notice, documents and proof of loss within the prescribed time.

A licensed professional appointed by an insurer to inspect damaged property, assess the cause and extent of loss, and recommend the amount payable. Survey reports are important in large general insurance claims.

A person licensed by IRDAI to solicit and procure insurance business on behalf of one or more insurers. An agent represents the insurer, must disclose the agency relationship, and earns commission on business procured.

An insurance intermediary licensed by IRDAI who represents the client rather than the insurer. A broker advises on needs, places business with suitable insurers and must disclose any remuneration received.

The remuneration paid by an insurer to an agent or broker for business procured, usually a percentage of the premium. Rates are regulated by IRDAI and must be disclosed in the intermediary's records.

The Insurance Regulatory and Development Authority of India, established under the IRDA Act, 1999. It licenses insurers and intermediaries, protects policyholders and regulates the insurance market across the country.

The safeguards available to a consumer of insurance, including fair treatment, disclosure of policy terms, timely claim settlement and access to grievance redressal. IRDAI regulates these protections.

The formal process for resolving a customer complaint against an insurer, beginning with the insurer's grievance officer and escalating to the Insurance Ombudsman. Time limits apply at each stage.

An independent authority that hears complaints against insurers on matters such as claim rejection or delay, and can pass awards binding on the insurer. The service is free to the policyholder.