Important Terms to Understand Term Plans Better

Premium Modes

This gives us an idea about the claim-solving ability of the insurance company. If claims are intimated and the insurance company settles those, claim-settlement ratio will be good. In simple words – claim-settlement ratio is the number of claims settled by the insurance company out of every hundred claims it has received. Higher claim-settlement ratio implies that the majority of claims are getting settled. Higher the claim-settlement ratio for the company, the better is the company rated in the eyes of the public.

Premium Modes

Premiums can be made in one single payment (lump sum) or can be made on yearly, half-yearly, quarterly or monthly basis.

Surrender Value (SV)

There are a few insurance companies that offer surrender value after the mandatory period of three years of policy running, but the amount of surrender value will vary depending upon the individual insurance company’s SV.

Rider Benefit (add-on covers)

A few of the insurance companies are offering additional benefits for temporary/permanent total disability, critical illnesses, etc., on payment of additional premium.

Maturity Benefit

A couple of insurance companies give the maturity value benefit if the insured survives the term period of the policy. This, however, varies from one company to another. This will include the amount of premium paid plus a nominal amount (called return) for the period the premium was invested, minus maintenance/policy administration charges.