IRDAI POSP Life key terms

The person or entity that owns an insurance policy and is entitled to exercise the rights under it, such as paying premiums, naming nominees, surrendering or assigning the contract. The policyholder may differ from the life assured.

The individual whose life is covered by the policy and on whose survival or death the benefit is triggered. The life assured is usually also the policyholder in individual life insurance, but not always.

The basic amount of money the insurer promises to pay on the happening of the insured event, such as death or maturity. It is stated in the policy schedule and forms the basis for calculating many other benefits.

The amount payable on death of the life assured, calculated as the higher of the basic sum assured or a multiple of annualised premium as prescribed by regulation. It must meet the minimum death benefit rules under IRDAI product norms.

The amount paid to the policyholder when a policy runs to the end of its full term with all premiums paid. It may include the sum assured plus accrued bonuses or guaranteed additions depending on the product type.

The total amount paid to the nominee or beneficiary when the life assured dies during the policy term, subject to policy terms and any exclusions. It may include the sum assured on death plus bonuses or fund value as applicable.

The consideration paid by the policyholder to the insurer in exchange for the risk cover. It may be paid as a single lump sum or in regular instalments such as monthly, quarterly, half-yearly or yearly.

The total premium payable in a policy year, expressed on a yearly basis. It is used in product regulations to compute minimum death benefits and in tax provisions to determine eligible premium limits.

The extra time allowed after the premium due date, usually 15 days for monthly and 30 days for other modes, during which the policy remains in force without late payment interest. If unpaid by the end, the policy lapses or becomes paid-up.

The status of a life policy when premiums remain unpaid beyond the grace period and the policy has not acquired any paid-up or surrender value. Risk cover stops, and the policy can be revived only within the permitted revival period.

The process of restoring a lapsed or paid-up policy to full force by paying overdue premiums with interest and satisfying the insurer's health or other underwriting requirements. Revival is normally allowed within five years of the first unpaid premium.

A policy that has acquired surrender value but whose premiums have stopped, so the policy continues with a reduced sum assured for the remaining term. No further premiums are payable, and benefits are reduced proportionately.

The amount the insurer pays to the policyholder if the policy is voluntarily terminated before maturity, after it has acquired a surrender value. It is usually lower than the total premiums paid in the early years.

A window, normally 15 days from receipt of the policy document, during which the policyholder may cancel a new policy and receive a refund of premium less proportionate risk charges and expenses. For distance marketing the period is 30 days.

A person named by the policyholder to receive the policy money in the event of the life assured's death. The nominee is entitled to the proceeds as a trustee or beneficial nominee as per the nomination provisions.

The legal transfer of the rights and benefits of a life policy from one person to another, either absolutely or conditionally. Assignment must be made in writing and notified to the insurer to be effective.

An optional add-on benefit attached to a base life insurance policy by paying an extra premium, such as critical illness, accidental death or waiver of premium cover. Riders are subject to IRDAI conditions on types and sum assured limits.

A traditional life insurance product that pays the sum assured plus bonuses on survival to maturity, or on death during the term, whichever occurs first. It combines protection with savings and is typically more expensive than pure term insurance.

A pure protection product that pays the sum assured only if the life assured dies during the policy term, with no maturity payment on survival. Because there is no savings element, the premium is low relative to the cover.

The share of surplus or profit declared by the insurer on participating (with-profits) policies, usually expressed as a percentage of sum assured or as a compound reversionary addition. Bonuses increase the maturity or death benefit.

A standard, non-linked, non-participating pure term life insurance product mandated by IRDAI that every life insurer must offer. It provides a simple death benefit with uniform minimum features, allowing easy comparison across insurers.

A life insurance product whose core features, terms and conditions are prescribed by IRDAI and which every registered life insurer is required to offer. Standard products are designed to be simple, low-cost and easy to understand.

The process by which an insurer submits a life insurance product, including its terms, conditions and premium rates, to IRDAI for approval or registration before selling it. Filing ensures compliance with product regulations and customer protection norms.

The Insurance Regulatory and Development Authority of India, the statutory regulator established under the IRDA Act, 1999. It licenses insurers and intermediaries, frames regulations, protects policyholders and promotes the orderly growth of the insurance industry.

A quasi-judicial body established under the Insurance Ombudsman Rules to settle grievances of individual policyholders against insurers, up to a prescribed monetary limit, through a free and speedy process. Its awards are binding on the insurer.

The formal process through which a policyholder can complain about an insurer's or intermediary's service. Insurers must acknowledge and resolve complaints within prescribed timelines, and unresolved matters can be escalated to the Ombudsman or IRDAI.

A Point of Sales Person, an individual appointed by an insurer or intermediary and authorised to sell only pre-approved simple life insurance products after completing IRDAI-prescribed training and passing the certification examination.

The act of approaching a prospective customer and persuading them to buy an insurance product, including explaining features and inviting an application. Solicitation by unlicensed persons is prohibited under the insurance laws.

The unfair practice of selling an insurance policy by misrepresenting its features, benefits, charges or suitability to the customer's needs. It is a conduct violation that can lead to penalties and cancellation of agency or POSP registration.

The principle that a product recommended to a customer must match the customer's needs, financial capacity, risk appetite and time horizon. Distributors are expected to assess needs and disclose product features honestly rather than pushing unsuitable products.

A document, required to be furnished by the insurer, that sets out the terms of the policy, benefits, exclusions, charges and other material particulars. It must be provided to the prospect before the proposal is signed.

The formal written contract of insurance issued by the insurer, containing the schedule, terms, conditions, exclusions, endorsements and the rights and duties of the parties. It is evidence of the contract between insurer and policyholder.

The principle requiring both the proposer and the insurer to disclose all material facts truthfully and completely. Non-disclosure or misrepresentation of material facts can make the policy void and allow the insurer to repudiate a claim.

Information that would influence an insurer's decision to accept a risk or to fix the premium, such as age, health, occupation, habits and existing insurance. These must be disclosed correctly in the proposal form.

The failure by a proposer to reveal a material fact asked about or relevant to underwriting, whether deliberately or by oversight. It may lead to claim rejection, policy voidance or premium adjustment depending on the circumstances and the law.

The application form filled by a person seeking insurance, which records personal, health, financial and other details used by the insurer for underwriting. The declarations in it form the basis of the contract.

The process by which an insurer assesses the risk presented by a proposal and decides whether to accept it, on what terms, and at what premium. It may involve medical tests, financial checks and exclusions or extra premium loading.

The duties and responsibilities of an insurance agent or POSP, including identifying prospects, explaining products honestly, assisting with proposals, collecting premiums, servicing policies and helping with claims, all within the regulatory code of conduct.

The statute that established IRDAI and gave it the mandate to regulate, promote and ensure orderly growth of the insurance sector. It defines the powers, functions and composition of the authority and the framework for insurance business in India.

The principal legislation governing the conduct of insurance business in India, covering registration of insurers, capital requirements, policy provisions, nomination, assignment and the duties of agents. It is amended and supplemented by IRDAI regulations.

The set of laws and procedures requiring insurers and distributors to verify customer identity, monitor transactions and report suspicious activity to prevent the laundering of illegal funds through insurance products.

Know Your Customer, the mandatory identity and address verification process carried out before issuing a policy. It helps prevent fraud and money laundering and is required for all insurance contracts under AML regulations.