Buying a life insurance policy is one of the most responsible steps you can take to protect your family’s financial security. Life insurance can help your loved ones pay debts, maintain their standard of living, and cover important expenses if you are no longer there to support them. However, before you sign any documents, it is important to familiarise yourself with some essential insurance terms. Understanding this terminology will help you make informed decisions and avoid any surprises later.

Here are 10 key terms every policyholder should know:

1. Accident

In insurance language, an accident refers to any unforeseen and unintentional event that results in injury, harm, or loss of life. If your policy includes accidental cover, it will pay an additional amount to your beneficiaries in the event of an accident-related claim.

2. Age limit

Each insurer specifies the minimum and maximum age limits for purchasing a life insurance policy. For example, you might need to be between 18 and 65 years old at the time of applying. Make sure you check the age criteria to ensure you are eligible for cover.

3. Agent

An agent is a certified person or organisation authorised to sell and service insurance products on behalf of the insurance company. They act as a link between you (the insured) and the insurer, helping you understand policy details, fill out forms, and manage claims if needed.

4. Beneficiary

A beneficiary is the person you name in the policy who will receive the payout (the death cover) if something happens to you. This could be a spouse, child, parent, or any other individual you choose. Always keep your beneficiary details updated to ensure the claim goes to the right person.

5. Coverage

Coverage, sometimes called the sum assured, is the guaranteed amount the insurer will pay your beneficiaries if you pass away while the policy is active. Choosing the right coverage is vital—it should be enough to cover your family’s expenses and any outstanding liabilities. For example, you can consider factors like children’s education, home loans, and everyday living costs.

6. Exclusions

Exclusions are specific situations or causes of death that the insurer will not cover. For instance, most life insurance policies exclude death caused by suicide within the first year, or death resulting from unlawful activities. It is essential to read this section carefully to understand what is not included.

7. Maturity date

The maturity date is when the policy term ends. If you have a policy that includes maturity benefits (such as endowment plans), the insurer will pay you the agreed amount on this date, provided you survive the term.

8. Maturity claim

A maturity claim refers to the process of receiving the payout when your policy matures. This amount may include your premiums, bonuses, and any additional returns. Keep in mind that pure term insurance plans do not usually offer maturity benefits—only protection.

9. Surrender value

If you decide to end your life insurance policy before it reaches maturity, you may receive a surrender value. This is the amount the insurer will pay you upon early termination. However, surrendering a policy often means you get back less than what you paid, so consider it carefully.

10. Grace period

A grace period is an extra time allowed after the premium due date. If you miss a payment, you can still pay during the grace period without losing coverage. This period usually ranges from 15 to 30 days, depending on the insurer. If you fail to pay within this time, the policy may lapse.

Final thoughts

Before purchasing any life insurance policy, take time to read the policy document thoroughly. If you have any questions, speak to your insurance agent or reach out to the insurer’s customer support. In India, there are also government portals like RAJSSP (Rajasthan Social Security Pension) that can help citizens access benefits and information related to financial security schemes, although these are separate from commercial life insurance products.

Understanding these terms helps you choose a policy that fits your family’s needs clearly and confidently. With the right insurance coverage and proper knowledge, you can ensure peace of mind and financial readiness. This clarity allows you to make informed decisions and prepare for unexpected life events with better security and less confusion.