Insurance glossary

ASR measures the rupee value of claims paid against the rupee value of claims received. It is usually lower than the headline Claim Settlement Ratio because large individual claims take longer to settle and small claims are easier to clear quickly.

Pair ASR with CSR when you hold a high-sum-assured policy: a 99% CSR on a 95% ASR means the insurer clears most small claims but is slower or tighter on the big ones.

Bima Sugam is an IRDAI-led initiative to create a single, interoperable digital platform covering policy purchase, servicing, and claims across life, health, and general insurers.

Implementation is staged and timelines keep shifting; treat it as a direction-of-travel rather than a live product. Always verify the current rollout status on the IRDAI website before making a purchase decision based on it.

Cashless works only at a hospital on the insurer's network list. You submit a pre-authorisation form; the TPA approves an amount; the hospital bills the insurer directly and you pay only the excluded items.

Reimbursement is the fallback at non-network hospitals: you pay the bill out of pocket, then submit bills, discharge summary, and ID proof to the insurer within the claim intimation window. Expect 10-30 days for processing once documents are complete.

Policies specify how soon a claim must be intimated: for planned hospitalisation, typically before admission; for emergency admissions, within a few days of admission; for death claims, as soon as practically possible.

Missing the window does not automatically void the claim, but it gives the insurer grounds to ask for an explanation and can slow down settlement. Always read the exact number of days in your policy document.

CSR = claims paid / (claims pending at start + claims intimated during the year) × 100, per IRDAI Handbook Table 15 for life insurers. It is a volume ratio, not a probability: your own claim outcome depends on disclosure accuracy and policy compliance.

CSR on low claim volumes (under 2,000 per year) is statistically noisy. For newer or smaller insurers prefer a 3-year average over a single-FY snapshot.

Health / general insurers publish a different metric (percentage of claims paid within 3 months) that is often mislabelled as CSR. Do not compare the two numbers side-by-side.

If a policy has a 20% co-pay, the insurer reimburses 80% of each approved claim and the remaining 20% comes out of your pocket — regardless of the total amount.

Co-pay is common in senior-citizen plans, policies bought in high-cost metros with a non-metro price, and some employer-arranged group plans. It is distinct from a deductible: co-pay is a percentage on every claim; a deductible is a fixed rupee threshold that applies only until it is met.

Consumables can inflate a hospital bill by 5-15%. Base health plans typically exclude them by default; dedicated 'consumables cover' or 'zero-deductible' riders pay for them.

Check the exclusion list in your policy document and compare it with the hospital's itemised bill template before buying. The insurer's published list of non-payable items is the source of truth.

Day-care procedures include cataract surgery, chemotherapy, dialysis, lithotripsy, and many endoscopic / laparoscopic procedures where technology has reduced the stay to a few hours.

Every insurer publishes a day-care list in the policy wording. Newer plans list 500+ procedures; older plans are narrower. The specific list — not a generic promise — is what decides whether a treatment is covered.

With a ₹5 lakh deductible, the insurer only pays what exceeds ₹5 lakh on a claim (super-top-up) or in aggregate across the year (aggregate deductible).

Deductibles are a different lever from co-pay: a deductible is a one-time rupee gate; co-pay is a share of every claim. Combining a base policy with a super-top-up is how most Indian households reach ₹15-25 lakh of cover at low marginal cost.

A family floater is usually cheaper per head and works well when every member is healthy and claims are rare. The downside: one bad year from one member can exhaust the pool for everyone else.

Individual covers cost more but isolate each member's risk. The right answer depends on age mix (older members concentrate risk), claim history, and total premium you can commit to. See the dedicated comparison for a worked walkthrough.

The free-look period lets a policyholder cancel a newly issued life or health policy and get a refund of premium, less proportionate risk premium and medical / stamp-duty costs.

The exact length is set by IRDAI regulation and is printed on the first page of the policy document. Read your policy's cover note for the precise window and the address / email to which the cancellation must be sent.

If the grace period ends and the premium still has not been paid, the policy lapses and cover stops. The exact window — typically measured in days — is in your policy schedule.

If the insured event happens during the grace period, most policies still pay out after deducting the unpaid premium. Always confirm the exact grace-period length in the policy document; do not rely on a generic 'one month' assumption.

GST applies to the risk-premium component of most insurance products. Rates differ by product type (term, endowment, ULIP, health) and have been revised multiple times since 2017.

This glossary does not quote a rate because GST rates on insurance are under active policy review and change from time to time. Read the rate printed on your premium receipt, and confirm the current slab at the CBIC / Ministry of Finance notifications page before making a tax-adjusted comparison.

Nearly every fresh health policy has an initial waiting period, usually measured in days, during which non-accident claims are excluded. Accident-related hospitalisation is typically covered from day one.

This is distinct from specific-disease waiting periods (e.g. on hernia or cataract, usually 1-2 years) and the PED waiting period. The exact lengths are in your policy wording.

If your insurer rejects a claim or delays it beyond the stipulated timeline and internal escalation does not help, you can file a complaint with the regional Insurance Ombudsman whose jurisdiction covers your city.

The Ombudsman can direct the insurer to settle the claim up to a prescribed monetary ceiling. Filing is free and does not require a lawyer. Details and jurisdiction maps are published on the Council for Insurance Ombudsmen website linked from IRDAI.

IRDAI was established by the IRDA Act, 1999. It sets minimum reserving rules, product-design guidelines, policyholder-protection norms, and the annual Handbook on Indian Insurance Statistics.

When this glossary cites a rule or number from IRDAI, the cited label points to the specific regulation or handbook table rather than just the regulator's home page.

Once a policy lapses, the insurer is not liable to pay any claim on the policy. Most policies allow revival within a defined revival period if the policyholder pays the arrears with interest and (sometimes) re-submits health evidence.

Lapsation is the single biggest silent risk in long-term policies. Set a reminder or a standing instruction for premium payments, and track whether the policy has paid-up or revival options before letting one lapse.

If your medical tests or declared history show elevated risk (e.g. borderline hypertension, a past surgery), the underwriter may either impose a loading (a percentage add-on to the base premium), a permanent exclusion, or both.

Loading decisions sit with the insurer and are usually communicated in the counter-offer. Ask for the medical underwriter's reasoning in writing so you can compare counter-offers from different insurers before accepting.

A life insurance policy bought under Section 6 of the Married Women's Property Act, 1874 creates a statutory trust: the death benefit flows only to the named beneficiaries (wife and/or children) and is protected from the policyholder's creditors or other legal claimants.

MWP is typically set up at the proposal stage; converting an existing policy later is harder. Consider it if you have business debt or expect to, since it ensures the family benefit survives a bankruptcy on your side.

Network hospitals offer cashless treatment; non-network hospitals require you to pay upfront and file for reimbursement. Every insurer publishes a searchable network list — always verify the specific branch of a hospital chain, not just the brand.

Some policies also distinguish 'preferred' (PPN) and 'non-preferred' network tiers; PPN hospitals have stricter tariffs and fewer sub-limit surprises.

Health-policy NCB accrues as a percentage of the base sum insured for every claim-free year and usually caps at 50-100% of the base. It is distinct from restoration benefit, which refills the sum insured after a claim in the same year.

A claim typically resets or reduces the accrued NCB — check your policy whether it is full reset or stepped reduction. For motor insurance the NCB works on premium discount, not sum insured.

Section 39 of the Insurance Act, 1938 distinguishes two regimes. Under §39(7), a 'beneficial nominee' — parent, spouse, or child (or any of them) — is beneficially entitled to the policy proceeds on death, meaning the money belongs to the nominee outright and does not form part of the deceased's estate.

Any other nominee (sibling, friend, more distant relative) is treated as a custodian: they receive the payout but hold it in trust for the deceased's legal heirs, who retain the beneficial interest under succession law.

Update the nomination after major life events — marriage, children, divorce, death of the existing nominee. A stale nomination is a common cause of payout disputes after a death claim.

Base health policies pay only for hospitalisation. OPD riders reimburse doctor consultations, tests, and medicines, usually up to an annual cap.

OPD is heavily priced — the premium often approaches the cap — so it tends to make sense only for families with chronic conditions that generate predictable monthly OPD spend.

If you stop paying premiums on an endowment / whole-life / money-back policy after a minimum paying period, it converts to 'paid-up': the original sum assured is scaled down proportionately, no further premium is due, and the reduced cover continues to maturity.

Paid-up is an alternative to outright surrender when you are no longer convinced of the policy's value but want to retain some cover. Pure term plans usually do not offer paid-up status.

IRDAI portability rules let you switch insurers at renewal and transfer the time you have already spent serving the initial, specific-disease, and PED waiting periods. You do not carry forward bonuses unconditionally; check the new insurer's portability terms.

Apply for portability well before the renewal date and keep every earlier policy schedule handy — the new underwriter will ask for continuity proof.

Pre-hospitalisation pays for consultations, diagnostics, and medication in a window leading up to admission; post-hospitalisation covers follow-up care after discharge. The exact lengths of those windows are set by the policy wording.

Keep every bill, prescription, and lab report from the entire treatment arc — these are what the claim is assessed on, even weeks after discharge.

Most health policies exclude claims related to a PED for a fixed waiting period (expressed in months or years in the policy document), after which claims for that condition become payable on the same terms as any other illness.

Always disclose every PED in the proposal form. Non-disclosure of a PED is the single most common reason claims get repudiated.

Premium is a function of age, sum assured / insured, policy term, health profile, smoker status, and any riders. For pure term and health plans the premium is risk-priced and does not accumulate any surrender value.

GST is charged on top of the base premium; see the GST-on-insurance entry. Always quote-compare on an all-in basis (base premium + GST + rider loadings).

Indian insurance law follows the principle of utmost good faith: the proposer must disclose all material facts (health history, income, existing cover, occupation hazards, smoking). A misstatement or omission can void the policy.

Treat the proposal form as a legal document, not a formality. If you are unsure whether a detail is 'material', disclose it — the insurer can accept with a loading, exclude a condition, or decline; any of those is better than a repudiated claim years later.

Repudiation is the strict denial category in IRDAI statistics: the insurer has concluded that the claim is not payable under the policy terms, typically on grounds of non-disclosure, fraud, exclusion, or policy not in force.

A repudiation letter must state the grounds. You can escalate through the insurer's internal grievance redress, then to the Insurance Ombudsman, and finally to the consumer courts. Preserve every document.

Restoration triggers vary: some policies restore only on a new, unrelated illness; others restore for any claim. Some restore once a year, others unlimited times; some reset the base sum insured, others top it up.

Restoration is different from NCB. NCB builds up over claim-free years; restoration refills a used pool inside the same year. Read the exact trigger in the policy wording — headline claims of 'unlimited restoration' often have conditions.

Revival typically requires payment of unpaid premiums with interest and, for larger cover or after long lapses, fresh medical evidence. The revival period is set by product and is in your policy document.

Reviving is almost always cheaper than buying a new policy at an older age; but if your health has deteriorated materially, the insurer may decline revival or impose a loading.

Common riders on life policies: critical illness (lump sum on diagnosis of a listed condition), accidental death benefit (extra sum on death by accident), waiver of premium (future premiums waived on disability).

Riders attached to a term plan are usually far cheaper than buying the same cover as a standalone policy, but the rider's benefit is usually capped at the base sum assured and ends when the base policy ends.

If the policy caps room rent at ₹5,000/day and you occupy a ₹10,000/day room, every associated charge (doctor's fees, OT charges, lab) gets reimbursed at only 50% — hospitals apply grade-linked tariffs to most line items.

Plans with 'no room-rent sub-limit' or 'single private room as standard' avoid this cliff but cost more. Match the room-rent feature to your preferred hospital's tariff sheet before buying.

Section 80C of the Income Tax Act, 1961 allows an individual / HUF to claim up to ₹1,50,000 in a financial year as a deduction against a defined list of eligible payments — life insurance premium, EPF, PPF, ELSS, principal repayment on a home loan, and others. The cap is aggregate across all eligible items.

Section 80C is available only under the old (with-exemptions) tax regime. The new default regime under Section 115BAC does not permit this deduction. Confirm your regime choice in the IT filing utility each year.

Section 80D of the Income Tax Act, 1961 allows a deduction for health insurance premium paid for self, spouse, dependent children, and parents. The maximum varies by the age of the insured (whether any of the persons covered is a senior citizen) and by whether the premium is split across self-family and parents.

This glossary deliberately does not quote a specific cap: the statutory limits are set by the Act (amended from time to time by the Finance Act) and the slab for senior citizens differs from the self-family slab. Refer to the IT Department filing utility or a qualified tax advisor for the current figure. 80D is available only under the old tax regime.

Policies list specific conditions — cataract, knee replacement, hernia, fibroids, some cancers — that carry a distinct waiting period even for a person with no prior diagnosis.

This window runs concurrently with the initial waiting period for a first-time policy. On portability, the time already served with the previous insurer is carried forward.

Sub-limits appear on room rent, ICU charges, ambulance, cataract surgery, joint replacement, maternity, and a handful of named procedures. If your bill exceeds the sub-limit, the excess is not paid even when the total sum insured is intact.

A high sum insured on a plan riddled with sub-limits can pay out less than a lower sum insured on a plan with none. Always read the sub-limit annexure before comparing premiums.

All term and traditional life policies in India carry a suicide exclusion window starting from policy commencement or revival. Inside this window, in case of suicide, insurers typically return a defined share of premiums paid rather than the full sum assured.

The exact window (measured in months) and the exact refund treatment are set by IRDAI product regulations and reflected in every policy document. Refer to your policy wording for the specific clause applicable to your product.

Sum assured is a fixed rupee number set at issuance. For a term plan it is the death benefit; for an endowment or whole-life plan it is the base amount to which bonuses accrue.

Do not confuse sum assured (life) with sum insured (health). The sizing methodology differs too: life cover is sized against income-replacement needs using the Human Life Value method; health cover is sized against hospitalisation cost in your city.

Sum insured is an annual ceiling, reset each renewal. Claims draw it down; restoration can refill it mid-year; NCB can enlarge it year-on-year.

Distinct from sum assured in life insurance — sum insured is what's available; sum assured is what's guaranteed.

Traditional plans (endowment, money-back, whole-life, ULIPs post-lock-in) accumulate a surrender value only after a minimum number of premiums is paid. Pure term plans have no surrender value — that's the whole point of 'pure' term.

Surrendering is almost always lossy in the early years. Compute the paid-up alternative and the post-surrender investible-corpus scenario before deciding; surrender makes sense when a better-structured replacement is available.

TROP costs roughly 1.5-2× a pure term plan for the same sum assured; the premium refund at maturity is nominal (no interest), so the implicit return on the extra premium paid is typically low single digits.

For most households, a pure term plan plus a separate investment in PPF or an index fund beats a TROP on both cover and returns. Run the comparison on your own numbers before picking TROP for the psychological comfort of 'getting money back'.

The TPA is the operational arm behind most cashless and reimbursement transactions. The insurer owns the contract; the TPA executes it.

A slow TPA can bottleneck your claim even when the insurer has approved it. Cross-check the TPA's reputation separately from the insurer's CSR before buying.

The underwriter reads the proposal form, orders medical tests and financial proofs, cross-checks the declared history, and issues a decision: accept at standard rates, accept with loading / exclusion, defer, or decline.

Underwriting is the reason apparently similar policies have different premiums for two buyers. Complete disclosure in the proposal form is the single biggest lever on a fair underwriting outcome.