NIA Life Agent key terms

A legal and financial stake in the life or property insured such that the policyholder benefits from the person's continued survival and suffers a loss from their death. It must exist at policy inception for life insurance.

The principle requiring both applicant and insurer to disclose all material facts honestly and completely, without being asked, so the contract is not based on concealment or misrepresentation.

Any information that would influence an insurer's decision to accept a risk or set its terms, such as health history, occupation, smoking habits and existing insurance. Deliberate non-disclosure can allow the insurer to repudiate the claim.

A principle restoring the insured to the same financial position as before a loss, no better and no worse. It applies mainly to general insurance; life insurance pays a fixed sum because a life cannot be valued in money.

The insurer's right, after paying a claim, to step into the insured's shoes and recover the loss from the party responsible. It is a feature of indemnity contracts and does not apply to life insurance policies.

The principle that where several policies cover the same loss on an indemnity basis, each insurer shares the payout proportionately so the insured cannot recover more than the actual loss. It does not apply to fixed-benefit life policies.

The basic amount the insurer promises to pay on death or maturity, stated in the policy schedule. Benefits, bonuses and rider amounts are usually calculated as multiples of or additions to this figure.

A pure protection plan that pays the sum assured only if the life assured dies within the chosen term, with no maturity payout if the person survives. It provides the highest death cover for the lowest premium.

A traditional plan that pays the sum assured plus accumulated bonuses on death, or on survival to the maturity date if earlier. It combines protection with a savings element and costs more than pure term cover.

A life policy in which part of the premium buys life cover and the balance is invested in market-linked units chosen by the policyholder. Fund value rises or falls with the underlying investments, and charges are disclosed upfront.

An optional add-on benefit attached to a base policy for an extra premium, such as critical illness, accidental death or waiver of premium. It cannot be bought alone and ends if the base policy terminates.

The amount payable to the policyholder when a savings-type policy completes its full term with all premiums paid. It typically includes the sum assured, accrued bonuses and any terminal bonus.

The amount the insurer refunds if the policyholder voluntarily terminates a policy with surrender value before maturity. Guaranteed and special surrender values are usually available only after premiums have been paid for a minimum period.

A reduced policy that continues after the policyholder stops paying premiums, with the sum assured scaled down in proportion to premiums actually paid. No further premiums are due, but the original cover is reduced.

The extra time, usually 15 to 30 days after a premium due date, during which the policy remains in force even though payment is late. If the life assured dies in this period, the due premium is deducted from the claim.

The status of a policy that has stopped being in force because premiums were not paid within the grace period and no surrender value was taken. Cover and benefits cease, though revival may be possible later.

Restoring a lapsed policy to full force by paying overdue premiums with interest and providing satisfactory evidence of continued good health. Insurers usually allow revival within a fixed period, commonly five years.

A window, commonly 30 days from receipt of the policy document, in which the policyholder may cancel a new policy and receive a refund of premium less proportionate risk charges and expenses. It protects against unsuitable sales.

The application document in which the proposer gives personal, medical, occupational and financial details and declares their truth. It forms the basis of the insurance contract and is signed by the proposer.

The insurer's process of assessing a proposed life against its acceptance criteria to decide whether to accept, decline, charge extra or impose conditions. It protects the pool of policyholders from unfair risk selection.

The risk that an applicant's character, habits, occupation or financial situation makes a claim more likely or more likely to be exaggerated. Underwriters look for over-insurance, fraud history and unusual financial pressure.

A life that falls within the insurer's normal acceptance range and is offered cover at ordinary premium rates without extra loading or exclusions. Most policies are issued on this basis.

A life whose health, occupation or habits present higher-than-average mortality, so the insurer charges an extra premium, imposes exclusions or offers a lower sum assured. The policy is still issued, but on special terms.

The policyholder's written right to name one or more persons who will receive the policy money on their death. A nominee is a trustee-like recipient and does not automatically become the owner of the proceeds.

The legal transfer of a policy's rights from the policyholder to another person or institution, either absolutely or conditionally. It must be in writing, signed and notified to the insurer to be effective.

A transfer of all rights in a policy to the assignee permanently, with no reversion to the assignor. A common example is assigning a policy to a bank as security that is not intended to be redeemed.

A transfer of policy rights that takes effect only on a stated event or while a condition lasts, after which rights return to the assignor. Mortgages and loans are usually secured this way.

The process of verifying that a death claim is genuine and payable, checking the policy's status, premium payments, cause and date of death, and disclosure at proposal. It protects the pool against fraudulent claims.

The legal position under which a person who has not been heard of for seven years by those who would naturally know is presumed dead, allowing a death claim. Insurers may settle on this basis after due enquiry.

The Insurance Regulatory and Development Authority of India, a statutory body that licenses insurers and agents, frames regulations and protects policyholders' interests. It supervises the insurance sector under the IRDAI Act, 1999.

The requirement that a person must hold a valid licence from IRDAI, obtained through prescribed training, examination and application, before soliciting or selling insurance. Selling without a licence is an offence.

The standards of behaviour prescribed for insurance agents, covering honesty, disclosure of commissions and policy terms, confidentiality, fair competition and prompt service. Breach can lead to penalties or cancellation of licence.

Selling a policy by misrepresenting benefits, hiding costs, concealing exclusions or selling cover that does not fit the customer's needs. It breaches conduct rules and may lead to refunds, penalties and loss of licence.

The laws, rules and internal controls that prevent criminals from disguising illegal funds as legitimate insurance transactions. Insurers must verify identity, monitor unusual transactions and report suspicious activity.

The mandatory process of identifying each customer and verifying their identity and address using prescribed documents before issuing a policy. It helps prevent fraud, impersonation and money laundering.

The Indian income-tax provision allowing a deduction from taxable income for specified investments and payments, including eligible life insurance premiums, subject to the overall limit for the financial year. Actual limits and conditions should be checked for the relevant year.

The Indian income-tax provision under which death benefits and qualifying maturity proceeds of a life policy are exempt from tax. Conditions, including premium-to-sum-assured limits, apply and change over time, so current rules must be verified.

The formal process by which a policyholder complains about an insurer's service or decision and seeks a remedy. It usually begins with the insurer's grievance officer and moves to the Insurance Ombudsman if unresolved.

An independent quasi-judicial authority that hears policyholder complaints against insurers within specified monetary limits and time frames, free of charge. Awards are binding on the insurer if accepted by the complainant.

An estimate of the economic value of a person's future earnings, net of personal expenses and taxes, used to judge how much life cover is needed. It gives a rational basis for the sum assured.

Advising a customer on cover after analysing their income, dependants, liabilities and goals, rather than pushing a product for commission. It supports suitability, disclosure and long-term persistency.

The principle that a rupee available today is worth more than the same rupee received later, because it can be invested and earn a return. It underpins premium calculation, savings products and financial planning.