Terminology
1. Sum Assured: Sum assured is the guaranteed amount, net of permissible partial withdrawals (as per para 1.3.1 & 8.2), of the benefit that is payable on death of the life assured.
2. Guaranteed Surrender Value: As defined in the provisions of Section 113 of Insurance Act, 1938.
3. Top-up premium: A top up premium is an amount (s) paid at irregular intervals during the period of contract. This is an additional amount of premium over and above the contractual basic premiums charged at the commencement of the contract.
4. Fund value: Fund value at any point of time represents the value of units at that point of time i.e. number of units multiplied by the price of the units.
5. Partial Withdrawals: Any part of fund that is encashed/withdrawn by the policyholder during the period of contract is referred to as partial withdrawal.
6. Switches: This is the facility allowing the policyholder to change the investment pattern by moving from one fund to other fund(s) amongst the funds offered under the underlying product of the insurer.
7. Premium re-direction: This is the facility allowing the policyholder to modify the allocation of amount of renewal premium into a different investment pattern from the option (investment pattern) exercised at the inception of the contract.
8. Surrender: Surrender means terminating the contract once for all. On surrender a surrender value is payable which is usually expressed as fund value less the surrender charge (the surrender charge could be zero at the later part of the contract).
9. Regular Premium Contracts: ULIPs where the premium payment is level and paid in regular intervals like yearly, half-yearly etc.
10. Single premium contracts: ULIPs where the premium payment is made by a single contribution (a one time payment) at the inception.
11. Limited premium payment contracts: ULIPs where the premium payment period is limited compared to the policy term. The premium is payable at regular intervals like yearly, half-yearly etc. premium contracts.
12. Whole Life Contracts: ULIPs which do not have a definite policy term and the contract terminates on death of the life assured. This can be issued with item 9 or 10 or 11 stated above.
13. Sales illustrations: This is a document furnished in accordance with life insurance council circular number LC/SP/Ver 1.0 dated 3rd February, 2004, conceals the effect of charges on the value of benefits at various stages of a unit linked contract. The illustrations furnished for these contracts shall inter alia furnish the yield, net of charges, corresponding to both the higher and lower interest rate scenario.
14. Death benefit: The amount of benefit which is payable on death as specified in the policy document. This is stated at the inception of the contract.
15. Maturity benefit: The amount of benefit which is payable on maturity i.e. at the end of the term, as specified in the policy document. This is stated at the inception of the contract.
16. Survival benefit: The amount of benefit which is payable at specific intervals, on survival to that period during the period of contract as specified in the policy document. This is stated at the inception of the contract.
17. Units: This is a portion or a part of the underlying segregated unit linked fund. Re. 1/-. This is stated in the unit linked policy documents.
18. Rider benefits: The amount of benefit payable on a specified event (for instance, accident), and is allowed as add on to main benefit.
19. Settlement options: A facility made available to the policyholder to receive the maturity proceeds in a defined manner (the terms and conditions are specified in advance at the inception of the contract).
20. Unit Linked Fund: Unit-linked fund pools together the premiums paid by policyholders and invest in a portfolio of assets to achieve the fund(s) objective. The price of each unit in a fund depends on how the investments in that fund perform. The fund will be managed by the insurer.
21. Fund Value: This is the product of the total number of units under a policy and the NAV (Net Asset Value per unit).
22. Valuation of funds: The determination of the value of the underlying assets of the unit fund.
23. Redemption: Encashing the units at the prevailing unit price offered by the life insurer where the process involves cancellation of units. This is applicable in case of exercising partial withdrawal, switch, maturity, surrender etc.
24. Allocation: creating the units at the prevailing unit price offered by the life insurer. This is applicable in case of premium payments and switches.
