Glossary

The terms that decide what a policy actually pays, defined in plain English. 54 entries across insurance and mutual funds.

Insurance — general

Sum insured: The maximum amount an insurer will pay under a policy in a policy year. It is a ceiling, not a guarantee: what you actually receive still depends on the policy’s limits, exclusions and any deductions such as co-payment or depreciation.
Premium: The amount you pay the insurer for cover, usually annually. For most retail insurance it is underwritten rather than listed, meaning it is calculated from your specific details — age, health, location, the vehicle, the claim history — rather than taken from a price list.
Policy wording: The full contract document setting out what is covered, what is excluded, and the conditions attached. It governs the relationship, not the brochure or the sales conversation. If the two ever differ, the wording is what a claim is decided against.
Free-look period: A window after receiving a policy in which you can cancel it and get a refund, less limited deductions, if the terms are not what you expected. It exists precisely so you can read the wording after purchase and change your mind.
Exclusion: Something a policy does not cover. Exclusions can be permanent, or time-bound like a waiting period. They are listed in the policy wording, and reading that list is the fastest way to understand what you have actually bought.
Deductible: An amount you bear yourself before the insurer pays. In motor insurance a compulsory deductible applies to every own-damage claim. In a super top-up health policy, the deductible is the threshold your claims must cross in a year before the top-up responds.
Nominee: The person you name to receive the policy proceeds. Following amendments to the Insurance Act 1938, a "beneficial nominee" — broadly a close family member — holds the money beneficially rather than merely receiving it on behalf of the estate, which matters for succession.; Term life insurance in India, explained
Corporate Agent: An IRDAI-registered intermediary that solicits and services insurance on behalf of insurers, and may place business with up to nine insurers in each category — life, general and health. Distinct from a broker, which represents the customer and can approach the whole market. Finzip is a Corporate Agent (Composite), CA0985.
TPA— Third Party Administrator: A licensed organisation appointed by an insurer to handle health policy servicing and claims — issuing health cards, authorising cashless treatment and processing reimbursements. Some insurers run this in-house instead. The TPA is who you deal with at claim time.
e-Insurance Account— eIA: A free account with an IRDAI-approved insurance repository that holds your policies electronically in one place, across insurers. It solves a real problem: policies your family cannot find. Finzip is an IRDAI-registered Approved Person of Centrico Insurance Repository, IRDAI/IR2/2026/01.

Group and employee cover

GMC— Group Mediclaim: An employer-purchased health insurance policy covering hospitalisation for employees and, optionally, their dependants. Because it is underwritten on the group rather than the individual, it typically requires no medical tests and often covers pre-existing conditions from day one.; Group health insurance in India: a guide for employers
GPA— Group Personal Accident: Employer-purchased cover paying a benefit on accidental death or on permanent total or partial disablement, usually 24 hours a day and worldwide. The sum insured is commonly set as a multiple of salary. It does not cover illness — only accident.
GTLI— Group Term Life Insurance: Employer-purchased pure life cover on employees, paying a sum assured to the nominee on death from any cause. It can be structured to meet an employer’s EDLI obligation. Like all group cover, it ends when employment ends.
CD balance— Cash Deposit balance: A running account an employer maintains with the insurer on a group policy. Premium for mid-term additions is debited from it and refunds for deletions credited back. If it runs dry, additions can stall — which can mean a new joiner is not actually covered.; Group health insurance in India: a guide for employers
Endorsement: A formal amendment to a policy after it is issued — most often adding or removing a member on a group policy, but also correcting details or changing terms. A change discussed but not endorsed has not taken effect.; Group health insurance in India: a guide for employers
Family definition: The shorthand describing who a group policy covers, written as 1+n. 1+3 is employee, spouse and two children; 1+5 or 1+6 typically adds parents or parents-in-law. Each step up adds cost, and the parental step adds the most.; Group health insurance in India: a guide for employers
Claim ratio— burn rate: Total claims paid against total premium collected on a policy. It is the number that drives renewal pricing on group cover: a ratio above 100% means the policy paid out more than it took in, and the insurer will look to recover that at renewal.; Group health insurance in India: a guide for employers
EDLI— Employees’ Deposit Linked Insurance: A statutory life insurance benefit for employees covered by the EPF scheme, funded by the employer. An employer may apply for exemption where it provides a substitute group life policy offering at least equivalent benefits.
Free Cover Limit— FCL: On a group life policy, the level of sum assured up to which members are covered without individual medical underwriting. Cover sought above the limit requires the member to be underwritten individually.
Corporate buffer: An additional pool of sum insured held at company level on a group health policy, which can be drawn on when an individual member exhausts their own cover. Usage is normally subject to employer approval and defined conditions.

Health insurance

Family floater: A health policy where one sum insured is shared across several family members, and any member can use any part of it. Usually cheaper than separate policies for a young family, but a single large claim can exhaust the cover for everyone.; Health insurance in India, explained
Waiting period: Time you must hold a policy before a particular claim becomes payable. Policies typically have an initial 30-day period for illness, one to two years for specific listed conditions, and a separate period for pre-existing conditions. Accidental injury is generally covered from day one.; Health insurance in India, explained
Pre-existing disease— PED: A condition you had before the policy started, generally one diagnosed or treated within a defined period beforehand. Retail policies apply a waiting period to it. Group policies commonly waive that waiting period, though the waiver is negotiated rather than automatic.; Health insurance in India, explained Group health insurance in India: a guide for employers
Room rent limit: A cap on the daily hospital room charge a policy will pay, often a percentage of the sum insured. It matters more than it looks: exceed the cap and many insurers apply a proportionate deduction to the associated treatment charges too, so the claim settles well below the bill.; Health insurance in India, explained
Co-payment— co-pay: A fixed percentage of every claim that you bear yourself. A 20% co-pay on a ₹4 lakh claim means you pay ₹80,000 regardless of your sum insured. Co-pays lower the premium and are common in senior-citizen plans.; Health insurance in India, explained
Sub-limit: A cap on what a policy pays for a specific treatment or expense — a named surgery, ambulance charges, a doctor’s fee — regardless of the overall sum insured. Sub-limits are a common reason a claim settles for less than the policyholder expected.; Health insurance in India, explained
Cashless claim: A claim where the insurer or its TPA settles the hospital bill directly, so you pay only what the policy does not cover. It is available at hospitals in the insurer’s network and requires pre-authorisation — ahead of a planned admission, or shortly after an emergency one.; Health insurance in India, explained
Reimbursement claim: A claim where you pay the hospital yourself and claim the money back afterwards, with the discharge summary, itemised bills and investigation reports. It works at any hospital, but you fund the treatment first.; Health insurance in India, explained
Network hospital: A hospital with which your insurer or its TPA has an agreement, allowing cashless treatment. Whether the hospitals you would realistically use are in the network matters more, in practice, than the size of the network overall.
Day-care procedure: A treatment that no longer requires 24 hours in hospital because of medical advances — cataract surgery, dialysis, chemotherapy. Covered where the policy lists it, despite not meeting the usual 24-hour hospitalisation requirement.
Cumulative bonus: An increase in your health sum insured for each claim-free year, at no extra premium. It typically reduces or resets after a claim, and it carries across when you port to another insurer, along with waiting-period credit.; Health insurance in India, explained
Portability: Your right under IRDAI rules to move a health policy to another insurer at renewal while carrying forward credit for waiting periods already served and any cumulative bonus. Apply ahead of the renewal date; the new insurer still has the right to underwrite you.; Health insurance in India, explained
Super top-up: A health policy that pays once your total claims in a policy year exceed a chosen deductible. Because it only responds above that threshold it costs far less than base cover, which makes it an efficient way to raise total cover.; Health insurance in India, explained
Restoration benefit: A feature that reinstates your sum insured after it has been used up in a policy year, so a second unrelated claim is not left uncovered. Conditions vary — some policies restore only for an unrelated illness, some only once a year.

Life insurance

Term insurance: Pure life cover for a fixed period. If you die within the term, the insurer pays your nominee the sum assured; if you outlive it, nothing is returned. Having no investment component is exactly why it is inexpensive relative to the cover it provides.; Term life insurance in India, explained
Sum assured: The amount a life insurance policy pays on the insured event. Unlike a health sum insured, which is a ceiling on reimbursement, this is a fixed benefit paid in full when the claim is admitted.
Rider: Optional cover attached to a base policy — commonly critical illness, accidental death benefit, or waiver of premium. Usually cheaper than buying equivalent standalone cover, but each carries its own definitions and conditions, and those definitions are the product.; Term life insurance in India, explained
Claim settlement ratio— CSR: The proportion of claims an insurer settled in a year, as reported in the IRDAI Annual Report. A useful sanity check but a blunt one: it says nothing about settlement speed or the size of disputed claims, and small differences between insurers are largely noise.; Term life insurance in India, explained
Material fact: Information that would affect an insurer’s decision to offer cover or the premium it charges — tobacco use, existing conditions, occupation, income, other policies. Failing to disclose one is the most common reason a life claim is contested.; Term life insurance in India, explained
MWP Act policy— Married Women’s Property Act 1874: A life policy bought under the MWP Act, which places the proceeds in trust for the wife and children beyond the reach of the policyholder’s creditors. Relevant for business owners carrying debt. It cannot be added to an existing policy, and the beneficiary cannot be changed later.

Motor insurance

IDV— Insured Declared Value: The agreed current value of your vehicle, calculated by applying a depreciation schedule to the manufacturer’s listed price. It caps what the insurer pays if the vehicle is stolen or written off. A lower IDV means a lower premium and a smaller total-loss payout.; Car and two-wheeler insurance in India, explained
No Claim Bonus— NCB: A discount on the own-damage premium earned for each claim-free year. It belongs to you rather than the insurer, so it transfers when you switch insurer or vehicle. One claim resets it, and letting a policy lapse beyond 90 days generally forfeits it.; Car and two-wheeler insurance in India, explained
Own damage— OD: The part of a motor policy covering damage to your own vehicle — accident, fire, theft, natural events. Third-party cover, which is the legally mandatory part, does not include it. A comprehensive policy is third-party plus own damage.; Car and two-wheeler insurance in India, explained
Zero depreciation— nil dep: An add-on that removes the depreciation an insurer would otherwise deduct on replaced parts, so more of a repair is covered. Usually available only on newer vehicles, and most policies limit how many such claims you can make in a year.; Car and two-wheeler insurance in India, explained
Break-in inspection: A physical inspection an insurer requires before issuing a policy on a vehicle whose previous cover has already expired, to confirm its condition. It is the practical reason renewing before expiry is easier than renewing after.; Car and two-wheeler insurance in India, explained
Third-party liability: Cover for injury, death or property damage you cause to someone else. Section 146 of the Motor Vehicles Act 1988 makes it mandatory for every vehicle used in a public place. It does not cover your own vehicle.; Car and two-wheeler insurance in India, explained

Mutual funds

SIP— Systematic Investment Plan: Investing a fixed amount in a mutual fund scheme at regular intervals, usually monthly, rather than as a lump sum. It spreads the purchase price across market levels and removes the need to decide when to invest.
NAV— Net Asset Value: The per-unit value of a mutual fund scheme, calculated at the end of each business day. The NAV you receive depends on cut-off timings — a transaction placed after the cut-off is processed against the next business day’s NAV.
TER— Total Expense Ratio: The annual cost of running a scheme, expressed as a percentage of assets and already reflected in the NAV. A regular plan carries a higher TER than a direct plan because it includes distributor commission.
Regular plan: A mutual fund plan bought through a distributor, whose expense ratio includes commission paid by the asset management company to that distributor. Finzip distributes regular plans and publishes the indicative commission rates it receives.
Direct plan: A mutual fund plan bought directly from the asset management company with no distributor involved, and therefore a lower expense ratio. The trade-off is that no intermediary is servicing the investment or answering for it.
Liquid fund: A debt mutual fund investing in instruments maturing within 91 days, under SEBI’s scheme categorisation. Commonly used by companies for short-term surplus cash. Market-linked, so the value can move — it is not a deposit.
Exit load: A charge deducted when you redeem units within a defined period of investing. Liquid funds carry a graded exit load over the first seven days; many equity schemes apply one for redemptions within a year.
ARN— AMFI Registration Number: The registration number issued by AMFI to a mutual fund distributor, which must be disclosed in its communications. Finzip’s is ARN-189270. You can verify any ARN on the AMFI website before transacting.

Reviewed by

K Abhay Kamath

IRDAI-certified Specified Person

Certificate SP0985787341, issued by the Insurance Regulatory and Development Authority of India, valid to 13 November 2027. Authorised to solicit insurance business for Finzip Private Limited, Corporate Agent (Composite) CA0985.

These definitions explain how terms are generally used in the Indian market. The terms that apply to you are those defined in the document issued by your insurer or the scheme information document of your fund. Finzip Private Limited is registered with IRDAI as a Corporate Agent (Composite), Regn. No. CA0985, and with AMFI as a Mutual Fund Distributor, ARN-189270.