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Term Insurance Terminologies

Term insurance terminology includes specific definitions, helping consumers understand policies, claims, and coverage Understanding term... Read more insurance terminology makes a real difference when you’re trying to buy or compare policies. These terms appear in brochures, policy documents, and insurer websites. Once you know what they mean. you can compare your coverage and ask questions more confidently about your rights as a policyholder. Read less

Term insurance terminology includes specific definitions, helping consumers... Read more understand policies, claims, and coverage. Understanding term insurance terminology makes a real difference when you’re trying to buy or compare policies. These terms appear in brochures, policy documents, and insurer websites. Once you know what they mean. you can compare your coverage and ask questions more confidently about your rights as a policyholder. Read less

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2% Milestone discount

2% discount on 1st year premium on these milestones

Event	Eligibility
Wedding (1 wedding only)	Within 6 months before or after the date of wedding
Birth/ Adoption of 1^st child*	Within 6 months before or after the birth/ adoption date
Home loan	Within 6 months of loan getting sanctioned
First job	Within 6 months of joining date

*Policy issuance eligibility for female customers will be determined by Board Approved Underwriting Policy (BAUP)

The above milestones cannot be clubbed to avail more discount, Such discount shall be capped to a maximum of ₹500 over the year.

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Tata AIA Sampoorna Raksha Promise - Non-Linked, Non-Participating, Pure Risk, Individual Life Insurance Product (UIN:110N176V11)

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Get ₹1 Crore Life Cover
@₹501/month¹

Up to 18.5% discount² (1^st year premium)
Return of premium³ option
4 hour claim settlement⁴

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What is term insurance terminologies?

When we say “terminology of term insurance,” we talk about the common words and definitions used throughout a term insurance policy. Some are very basic, like premiums or policy term. Others sound a bit technical, such as free look periods or riders. Terminology of term plans is not meant to complicate things. Instead, it explains how the product works, what you’re paying for, and what you or your family can claim under different circumstances. Once you know the language, reading a policy document becomes easy.

What is term insurance?

Term insurance provides pure financial protection for a specific number of years. If the life assured passes away during that time, the insurer pays the sum assured to the nominee. Families use term insurance as a safety net so that regular expenses, loan repayments, and future plans don’t get disrupted if something unexpected happens. Since term plans focus only on protection, premiums tend to be more affordable for the amount of coverage you get.

Different types of term insurance terminologies

Below are some of the most common and essential terminology of term plans:

Policyholder

The person who buys the policy, pays the premium, and holds the legal rights to modify the policy details.

Life Assured

The individual whose life is covered under the policy. If the life assured passes away during the policy term, the death benefit is paid.

Nominee

The person appointed by the policyholder to receive the sum assured in case of the life assured's death. Typically, nominees are close family members.

Sum Assured

The guaranteed amount that the insurer pays to the nominee if the life assured passes away during the policy term. This amount is decided at the time of purchase.

Policy Term

The length of time for which the policy covers. It can vary anywhere from 5 years to 40 years or more based on the insurer.

Premium

The payment required for maintaining the policy. The payment can be made on a monthly, quarterly, half-yearly, or annual basis.

Payment Term / Mode

This refers to how and when premiums are paid. For example, monthly premium payment mode or annual payment mode.

Death Benefit

The amount payable to the nominee if the life assured dies during the policy term. In term insurance, the death benefit and sum assured are usually the same, unless riders or options change the structure.

Maturity Benefit

Most pure term plans do not offer maturity benefits. However, return-of-premium term plans refund the total premiums paid if the policyholder survives the term.

Riders

Additional optional benefits added to a base term plan to enhance coverage. Examples include accidental death rider and critical illness rider.

Claim

The official request filed by the nominee or policyholder to receive the policy benefits. In case of death, the nominee files a death claim.

Free Look Period

A short window (usually 15–30 days) provided after policy purchase to review the policy terms. If the buyer disagrees with the conditions, they can cancel the policy and receive a refund as per guidelines.

How does term insurance work?

The policyholder chooses the coverage and duration, pays the premiums on time, and keeps the policy active. If the life assured dies during that period, the insurer pays the agreed death benefit to the nominee. If the plan ends and there’s no maturity component (which is common with pure term plans), the coverage simply stops.

In simple steps, term plan works as follows:

Choose the sum assured and how long you want coverage.
Pay your premiums as per the selected mode (monthly, yearly, etc.).
The insurer provides protection for that duration.
If the life assured dies during the term, the nominee files a claim.
The insurer reviews the documents and releases the death benefit if everything is in order.

Understanding riders and add-ons

Riders are additional features that enhance a term insurance policy. They provide extra financial protection for specific risks. Some commonly used riders include:

Accidental Death Rider

Provides an additional amount apart from the base sum assured if death occurs due to an accident.

Critical Illness Rider

Pays a lump sum amount if the life assured is diagnosed with a listed critical illness such as cancer or heart attack. This amount can help manage treatment and lifestyle adjustments.

Accidental Disability Rider

Provides financial support if the life assured suffers permanent disability due to an accident. In practice, this helps replace income during recovery or long-term disability.

Waiver of Premium Rider

If the policyholder becomes disabled or critically ill, future premiums may be waived while the policy continues to remain active.

Riders are optional, cost extra, and should be chosen based on personal health, lifestyle, and financial responsibilities.

Conclusion

Being aware of the term plan terminology makes the entire procedure much simpler, whether it is purchasing, holding, or claiming. They usually includes sum assured, nominee, policy term, premium paying term, and riders, among others. There would be no confusion, and you can compare the plans easily. The objective of providing financial assistance for your family is fulfilled through the relevant plans that you opt for, after understanding the associated terminology.

What is the difference between sum assured and death benefit?

The sum assured is the fixed coverage amount, whereas the death benefit is the actual payout and may include rider amounts or other components depending on the policy.

Can I change my nominee after buying the policy?

Yes. Most insurers allow nominee changes anytime during the policy term with a basic form and supporting documents.

What factors affect the premium in term insurance?

Age, sum assured, lifestyle habits (such as smoking), health status, occupation, and policy duration are the key factors.

How can I choose the right sum assured for my term insurance policy?

Look at your income, ongoing loans, household expenses, and long-term financial commitments. Many financial planners recommend coverage of at least 10–15 times your annual income.

Why is it important to understand term insurance terminology?

Because it reduces confusion, helps you choose the right coverage, and ensures smoother interactions during policy changes or claims.

Tata AIA Sampoorna Raksha Promise - Non-Linked, Non-Participating, pure risk, Individual Life Insurance Product (UIN:110N176V11)
¹As per the duly approved product design and terms & conditions of the product, illustrated premium of ₹501 is the monthly premium for a 20 yr. old female, Standard Life, Non-Smoker for ₹1 Cr. Sum Assured with Policy Term of 20 yrs. (Regular Pay) under Life Promise Option of Tata AIA Sampoorna Raksha Promise with first year premium discount of 10% for digital purchase and 8.5% for salaried person. Please refer Benefit Illustration for more details.
²As per the duly approved product design and terms & conditions of the product, this includes first year digital discount of 10% for Limited Pay/Regular Pay and 8.5% salaried discount. For Single Pay, 1% discount will be available for online purchase and salaried discount each.
³Under Life Promise Plus Option, an amount equal to the 100% of the Total Premiums Paid (excluding loading for modal premiums) shall be payable at the end of the Policy Term, provided the life assured survives till maturity and the policy is not terminated earlier.
⁴Applicable to only non-early claims with more than 3 years of policy duration, non-investigation cases, up to Sum Assured of ₹50 Lakh. Applicable for branch walk in. Time limit to submit claim to Tata AIA Life Insurance is 2 pm on working days. Subject to submission of complete documents. Not applicable for ULIP policies and open title claims.
This product is underwritten by Tata AIA Life Insurance Company Ltd.
The plan is not a guaranteed issuance plan, and it will be subject to company’s underwriting and acceptance.
Insurance cover is available under this product.
For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. The precise terms and condition of this plan are specified in the Policy Contract.
Buying a Life Insurance Policy is a long-term commitment. An early termination of the Policy usually involves high costs, and the Surrender Value payable may be less than the all the Premiums Paid.
In case of non-standard lives and on submission of non-standard age proof, extra premiums will be charged as per our underwriting guidelines.
L&C/Advt/2026/Feb/0951