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Insurance is an intricate product and so is its terminology. While going through a policy docket, we come across certain terms that we too often mix with each other. We have taken a vow to bust such confusing jargons once and for all. Take a quick look!
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Further in this article, we have elaborately discussed everything you need to know about COVID_19 and life insurance.
Beneficiary is the person(s) or entity(ies) supposed to get the insurance proceeds when the insured dies. Nominee is the person supposed to receive the insurance proceeds when the insured dies. Note that the two differ in the definition just by one word, nominee receives the proceeds but need not necessarily be able to use it. A nominee is not the owner, rather the nominee's primary role is to manage the death proceeds and hand it over to the beneficiary. The beneficiary on the other hand is a default owner in the case of demise of the insured.
Beneficiary can be parents, spouse, siblings, children, or institutions. Nominee can be your immediate family member or non-family member who is close enough and can be trusted to hold and pass the proceeds to insured's legal heirs.
Sum Assured is the pre-defined amount, agreed upon by the insurer and the insured, to be paid in case of an eventuality. Life insurance works on sum assured. For instance, If the sum assured is Rs 5 lakh and the insured suffers an eventuality, death or disability, as the case may be, the beneficiary will be paid out a lump sum of Rs 5 lakh.
Sum Insured is the upper limit of the payout that the insurance company is liable to pay to the insured in case of an eventuality. Thus, sum insured follows the principle of indemnity which states that the insurer is to compensate the loss of the insured so as get him restored to his financial position. Non life insurance such as car insurance, health insurance, and home insurance works on sum insured. For instance, the sum insured is Rs 2 lakh under a car insurance, if the insured had an accident and had to bear a financial loss of Rs 1 lakh, his insurance company is liable to pay him Rs 1 lakh. However, if the insured suffers a loss of Rs 3 lakh, the insurance company will be paying him Rs 2 lakh that is the maximum limit of liability and the rest 1 lakh will have to be paid by the insured out of the pocket.
An insurance agent is a sales representative of an insurance company. Agents pitch the best features of their products and try to mould them to the insured's need. Agents receive commission from the insurance company when they sell an insurance plan to the buyer.
Aggregator on the other hand acts a kind of platform for the buyer to see and compare a number of plans fitting his specific needs. The comparison can be made on the basis of premium, coverage or exclusions. Unlike agents, aggregators do not receive any commission from the insurance companies and hence provide an unbiased comparison. Insurance aggregators save you effort, time, energy and money and you get the insurance product most suited to you.
Both co-pay and co-insurance are a kind of out-of-pocket expenses that have to be borne by the insured when a claim is filed. The difference between the two is that while co-pay is a fixed sum that has to be paid while availing services, co-insurance is a fixed percentage of the total claim amount.
To get the difference clearer, take a look at the example given below:
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
| Plan A with Co-Pay of Rs 1000 on one day hospitalization | Plan B with Co-Insurance of 20% on one day hospitalization | |||
| Billed Amount - Rs 2000 | Billed Amount - Rs 6000 | Billed Amount - Rs 2000 | Billed Amount - Rs 6000 | |
| Insured Pays | Rs 1000 | Rs 1000 | Rs 400 | Rs 1200 |
| Insurance Company Pays | Rs 1000 | Rs 5000 | Rs 1600 | Rs 4800 |
Also Know about Term Insurance.
Note: You can easily calculate the term plan premium by using the term plan calculator online tool.
Note: You should also check the benefits of term insurance if you are planning to purchase the term insurance plan.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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