Life insurance terms explained.
By Venkatesh TK, Founder, AdviceSahi. 20+ years in banking, wealth management and insurance distribution. Updated 16 October 2026.
Premium is what you pay, sum assured is the base cover, policy term is how long cover lasts and the nominee is who receives the benefit. The terms below cover the words that appear most often in a life insurance policy document.
The basics
- Premium: the amount you pay for the policy, monthly, quarterly, half yearly or yearly.
- Sum assured: the base amount the insurer agrees to pay on a claim.
- Policy term: the number of years the cover runs.
- Premium paying term: the number of years you pay premiums, which can be shorter than the policy term.
- Nominee: the person you name to receive the benefit.
Benefits and add ons
- Death benefit: the amount paid to the nominee if the life assured dies during the term.
- Maturity benefit: the amount paid if you survive to the end of a savings policy.
- Rider: an optional extra cover added to a base policy for an additional premium.
- Bonus or guaranteed addition: extra amounts added to some savings plans. Bonuses are not guaranteed unless the policy says so.
When things change
- Grace period: extra time to pay a missed premium without losing cover.
- Lapse: when the policy stops because premiums were not paid.
- Revival: restarting a lapsed policy by paying dues, under the insurer rules.
- Paid up: a policy where premiums stop but a reduced benefit continues.
- Surrender: ending the policy early for a surrender value.
Terms about returns
IRR is the effective yearly rate that links premiums and benefits across the full term. Guaranteed benefits are fixed by the policy. Non guaranteed benefits, such as future bonuses, can change.
Where can I read more?
The IRDAI website, irdai.gov.in, publishes regulations and consumer information. AdviceSahi also shows these terms for each of your own policies in plain language.
Common questions
What is the difference between policy term and premium paying term?
Policy term is how long the cover lasts. Premium paying term is how long you pay. A policy can run for 20 years while you pay for 10.
What is a rider?
A rider is an optional extra benefit, such as accidental death cover, added to a base policy for an additional premium.
What is a grace period?
It is the extra time after the due date during which you can still pay the premium without the policy lapsing.
See what your policies are worth.
Add your life insurance policies to AdviceSahi and get a plain language report. Free for policy holders.
Get the AdviceSahi appKeep reading
How to read your life insurance policy documentSurrender value in life insurance, explainedWhat is a life insurance policy check?This article is for general information only. It is not financial, tax or insurance advice. AdviceSahi is a technology platform and is not an IRDAI registered entity.