Insurance Glossary
The A-Z dictionary of Indian insurance terms translated into plain English.
Claim Settlement Ratio (CSR)
The percentage of claims an insurer pays out compared to the number they receive. A 95% CSR means out of 100 claims filed, 95 were paid. It is measured by volume, not value.
Co-payment
A clause where you must pay a fixed percentage of every health claim out of your own pocket. If your bill is ₹1,00,000 and you have a 20% co-pay, you pay ₹20,000, the insurer pays ₹80,000. Under-60s should avoid this.
Consumables
Items used during a hospital stay that get thrown away: gloves, masks, PPE kits, syringes, cotton. Standard policies do not cover these. Often accounts for 5-10% of a hospital bill.
Day Care Procedure
Medical treatments that require hospitalisation but take less than 24 hours due to modern technology (e.g., cataract surgery, dialysis, chemotherapy). Good policies cover 300+ of these.
Deductible
The amount you agree to pay out-of-pocket before the insurance coverage kicks in. Commonly used in 'Super Top-Up' health policies and motor insurance to lower the premium.
Endowment Plan
A life insurance policy that mixes pure life cover with an investment component. High premiums, low cover, low returns (typically 4-6%). Not recommended for most people.
IDV (Insured Declared Value)
The current market value of your vehicle. This is the maximum amount your motor insurance will pay if the car is stolen or completely destroyed.
Incurred Claim Ratio (ICR)
The total value of claims an insurer pays out divided by the total premiums they collected. Shows financial health. <50% = they overcharge or deny claims. >100% = they are losing money. Ideal is 70-90%.
No Claim Bonus (NCB)
Your reward for not making a claim in a year. In health insurance, it increases your sum insured (cover amount) for free. In motor insurance, it gives you a discount on your next year's premium.
PED (Pre-Existing Disease)
Any medical condition that was diagnosed, treated, or for which symptoms existed before the policy start date. Must be disclosed honestly at the time of purchase.
Per IRDAI (Insurance Products) Regulations 2024: The maximum waiting period any insurer can impose for pre-existing diseases is 36 months — reduced from the earlier standard of up to 48 months.
After the moratorium period of 60 continuous months (5 years) with any insurer, no claim can be rejected on grounds of non-disclosure of any health condition — except in cases of proven fraud.
Portability
The right to transfer your health insurance policy to a different insurer without losing the waiting period credit you've already accumulated.
Restoration Benefit
A health insurance feature where the insurer refills your sum insured if you exhaust it during the year. Check if it refills for the 'same' illness or only for 'different' illnesses.
Return of Premium (ROP)
A type of term insurance that gives you back all the premiums you paid if you survive until the end of the term. Sounds good, but the premium is very high. Usually a bad mathematical deal.
Sub-limit
A hidden cap within your total cover. For example, your total cover is ₹5 lakh, but cataract surgery has a 'sub-limit' of ₹40,000. Even if the surgery costs ₹60,000, the insurer only pays ₹40,000.
Sum Assured / Sum Insured
The maximum cover amount. 'Assured' is used for life/term plans where the exact amount is guaranteed to be paid on death. 'Insured' is used for health plans where the insurer pays up to that maximum limit based on the actual hospital bill.
Term Insurance
The simplest, cheapest form of life insurance. You pay a premium for a set number of years. If you die, your family gets a large sum. If you survive, you get nothing. Pure protection.
Waiting Period
A period during which certain conditions are not covered. Typical wait times: 30 days for general illnesses, 2 years for specific slow-growing diseases (cataract, hernia), and 2-4 years for pre-existing diseases.