Insurance Terms & Definitions Guide
A comprehensive insurance terminology guide to help you understand policy terms, important clauses, and your rights before buying or renewing.
Sum Assured
Sum Assured is the amount specified under a life insurance policy for the applicable insured event, subject to the policy terms and conditions.
Human Life Value (HLV)
An educational mathematical estimation of the financial protection your family would need if earnings stop.
Nominee
A nominee is the person designated by the policyholder to receive policy proceeds in the event of the life assured's demise, subject to applicable law and policy terms.
Rider (Add-on Cover)
Optional supplementary benefits attached to a base policy for extra protection (e.g. Critical Illness, Accidental Death).
Surrender Value
The cash amount payable to the policyholder if a traditional life policy is terminated prior to its maturity date.
Grace Period
An extra window of 15 to 30 days allowed beyond the premium due date to pay without policy lapsing.
Sum Insured
The maximum annual indemnity limit up to which a health policy will reimburse actual hospital bills.
Pre-Existing Disease (PED)
Any health condition, injury, or medical ailment diagnosed or treated within the timeframe specified in the policy.
Waiting Period
Mandatory timeframe (initial exclusion, specific illness waiting, and PED duration) before claims become eligible.
Co-Payment (Co-Pay)
A clause requiring the insured to pay a fixed percentage (e.g. 10%-20%) of every claim bill out of pocket.
Deductible
An initial fixed amount that the policyholder must pay before the insurance policy starts paying benefits.
Restoration / Reinstatement Benefit
Refills your sum insured if exhausted due to hospitalization during the policy year per terms.
Room Rent Sub-Limit
A daily ceiling on hospital room charges. Exceeding this may trigger proportionate deductions on hospital expenses.
No Claim Bonus (NCB)
A bonus reward (cumulative bonus or discount) earned for every claim-free policy year.
Cashless Hospitalization
Facility where the network hospital directly coordinates treatment billing with the insurer or TPA.
Super Top-Up Plan
High-value health cover that activates once cumulative annual medical expenses cross a chosen deductible.
Day Care Treatment
Medical procedures or surgeries requiring less than 24 hours of hospitalization due to modern technology.
Portability
The statutory right of a health policyholder to transfer their policy to another insurer without losing accrued waiting period credits.
Insured Declared Value (IDV)
The maximum sum insured for a vehicle, calculated as manufacturer selling price minus standard depreciation based on vehicle age.
Zero Depreciation (Dep Protect)
Add-on cover that minimizes depreciation deductions for plastic, rubber, glass, and metal replacement parts.
Third-Party Liability Cover
Statutory mandatory insurance protecting against legal financial liabilities arising from injury, death, or property damage to third parties.
Engine Protect Add-on
Covers repair/replacement of engine internal parts damaged due to water ingress or oil leakage.
Consumables Cover
Covers cost of consumable items like engine oil, nuts, bolts, grease, brake oil, and coolant during accident repair.
Free-Look Period
Trial window from policy document receipt allowing policyholders to review terms and cancel subject to applicable rules.
Incurred Claim Ratio (ICR)
The percentage of total claims paid out of total premiums collected by an insurer in a financial year.
Claim Settlement Ratio (CSR)
The ratio of total claims settled versus total claims received by an insurer within a financial year as per IRDAI annual reports.
Section 80C & 80D Tax Deductions
Income tax deductions on life insurance (80C) and health insurance (80D), plus applicable tax exemptions under Section 10(10D).
Critical Illness Cover & Riders
Fixed benefit insurance paying a lump sum payout upon confirmed diagnosis of specified critical ailments.
Death Benefit in Life Insurance
The financial sum assured paid to the designated nominee upon the unfortunate demise of the policyholder during policy tenure.
Paid-Up Value
The reduced sum assured that a traditional savings life policy acquires when premium payments are discontinued after a qualifying period.
Insurance Marketing Firm (IMF)
An IRDAI-registered insurance intermediary (like RakshaPoint) authorized to solicit and service insurance products through Insurance Sales Persons (ISPs).
Need Clarification on Any Policy Term?
Our Insurance Sales Persons (ISPs) provide parameter-based guidance on clauses, exclusions, and waiting periods.