The Complete Guide to
Life Insurance
in India

The guaranteed amount your insurer will pay to your nominee upon your death. This is the primary purpose of life insurance — the minimum payout irrespective of any bonuses or fund value.

The amount paid periodically (annually, half-yearly, monthly) to keep the policy active. For term plans, premium is locked at the time of purchase and never increases for the entire policy term.

The person legally entitled to receive the policy benefits upon the insured's death. IRDAI mandates that every life policy must have a named nominee. After 2015, nominees (spouse/children) have absolute rights — creditors cannot attach the payout.

The duration for which the life insurance cover is active. For term plans, you remain insured if you pay premiums throughout. Typically 10–40 years, or up to age 85. Coverage ends at term expiry if you survive.

The amount an insurer pays if you terminate a life insurance policy before its maturity. Applicable to endowment and ULIP plans. For term plans, there is no surrender value. IRDAI regulates minimum guaranteed surrender values.

An addition to the sum assured declared by the insurer based on their investment performance. Types: Reversionary bonus (declared annually, paid on claim or maturity), Terminal bonus (one-time at maturity/claim). IRDAI regulates bonus declaration process.

A specified period after the premium due date during which the policy remains active without lapse, even if premium is unpaid. IRDAI mandates: 30 days grace period for annual/half-yearly/quarterly; 15 days for monthly payment modes. If death occurs in grace period — claim is paid minus overdue premium.

A policy that lapses when premium is unpaid beyond the grace period. IRDAI mandates that insurers must offer revival of lapsed policies within 5 years. Revival requires paying all arrear premiums + interest + possible medical tests.

Assignment transfers policy ownership to another person (useful for bank loan collateral). Nomination names the beneficiary but doesn't transfer ownership. IRDAI mandates clear distinction and disclosure of both rights in policy documents.

For early claims (death within 3 years), insurers may investigate to verify that material facts were not concealed at application. After 3 years, Section 45 of the Insurance Act prohibits rejection on grounds of non-disclosure — claims must be paid.

If you stop paying premiums after a certain number of years (policy acquires paid-up value), the policy doesn't lapse — it continues with a reduced sum assured proportional to premiums paid. IRDAI mandates minimum paid-up value after 3 years of premium payment.

A variant of term insurance where all premiums paid are returned at the end of the policy term if the insured survives. Premium is significantly higher than regular term plans (2–3× typically). IRDAI requires clear disclosure of the premium difference.