Financial Literacy - Unit 11 Protection and Investment Related Financial Services

Flashcards for reviewing financial literacy concepts related to protection and investment related financial services.

General Insurance

Financial protection against losses or damages to assets, liabilities, and other non-life events; includes health, motor, home, travel, and liability insurance.

Life Insurance

A contract where an insurer promises to pay a sum of money upon the death of the insured or after a set period, providing financial security to the insured's family or dependents.

Term Life Insurance

Pays a death benefit if the insured dies within a specified term; if the insured survives the term, no benefit is paid.

Whole Life Insurance

Provides coverage for the insured's entire lifetime and includes a savings component that grows over time.

Life Insurance Policy

A contract between an insurance company and a policyholder where the insurer promises to pay a sum in exchange for premiums, after a definite period or upon the death of the insured.

Term Life Insurance

Promises to pay a death benefit while the policy is active, i.e., during its term period. Generally, on maturity, nothing is paid to the policyholder.

Endowment Policies

Conventional life insurance plans that are savings oriented, offering coverage against untimely death and providing a guaranteed maturity benefit.

Pension Policies

Annuity plans designed to address post-retirement requirements, providing the dual benefit of insurance coverage and investment.

Unit Linked Insurance Plans (ULIPs)

Life insurance plans that offer the advantages of both insurance and investment, investing premiums in market-linked funds.

Health Insurance

Policies meant to cover emergency medical expenses, either reimbursing or paying the amount for treating any injury or illness.

Individual Health Insurance

Provides coverage to just a single person.

Group Health Insurance

Offered to employees by their employer.

Family Floater Insurance

Provides coverage to the whole family (husband, wife, and their two children) under a single plan.

Critical Illness Cover

Provides coverage against numerous life-threatening illnesses such as heart attack, cancer, stroke etc. Policyholder receives a lump sum if diagnosed with any critical illness.

Property Insurance

Policies that provide liability coverage or property protection coverage to property owners, offering financial reimbursement for theft or damage.

Motor Insurance

Provides financial assistance when a vehicle has an accident, with options for two-wheelers, cars, commercial vehicles, and fleets.

Home Insurance

Provides comprehensive protection to the structure of a house and its contents against physical damage or destruction from manmade and natural calamities.

Home building or structure insurance

Provides coverage against the damage to the structure of a house because of any calamity.

Burglary and theft insurance

Provides coverage against stolen goods if there is any theft or burglary.

Public liability coverage

Offers coverage against damage caused because of natural calamities, anti-social activities, and fire outbreaks.

Contents insurance

Provides coverage against loss of vehicles, furniture or any other appliance due to theft, fire, riot, or flood.

Fire Insurance

Provides coverage to both immovable and movable property against losses due to fire.

Travel Insurance

Provides protection against the losses and costs associated with traveling, including flight cancellations, loss of baggage, and medical emergencies.

Marine Insurance

Provides insurance coverage against loss occurred due to marine perils.

Liability Insurance

Offers coverage against claims of damage or loss for which a policyholder needs to compensate the other party.

Postal Life Insurance (PLI)

Welfare scheme introduced by the Department of Posts in 1884 to help its employees, offering insurance coverage with loan, nomination, revival, and conversion facilities.

Rural Postal Life Insurance (RPLI)

Launched on March 24, 1995, for extending insurance coverage to people residing in the rural regions of India, providing benefits to the society’s weaker sections and women workers.

Housing Loan

An amount borrowed by an individual from a financial institution for purchasing, constructing, extending, or renovating a home.

Home loan

A loan availed to buy a home. Offered by numerous public banks, private banks and housing finance companies.

Home extension loan

A loan can be availed to finance the cost of adding a new floor or room to the existing home, constructing a new bathroom, extending the kitchen etc.

House renovation or improvement loan

Provides financing to repair or renovate the existing house, like plumbing, painting, waterproofing the ceiling, upgrading electrical system etc.

Home construction loan

Can be used if a person already has a plot of land and needs funds to construct a home on that land.

Composite home loan

Can be used to obtain financing to buy a plot of land as well as constructing a home on that land.

Balance transfer loan

Enables the housing loan borrowers to transfer their present housing loan from one lender to the other.

Pradhan Mantri Awas Yojana (PMAY)

A government scheme introduced in 2015 to encourage affordable and sustainable housing among the lower income group in India.

Pradhan Mantri Awas Yojana Gramin (PMAY-G)

Its objective is to cater to the housing needs of the rural poor.

Pradhan Mantri Awas Yojana Urban (PMAY-U)

The objective of PMAY-U is to address the housing needs of the urban poor. This scheme covers around 4,331 cities and towns.

Annuity

A contract between the life insurer and an individual. Its objective is to generate a regular income for the remaining life of the individual after retirement.

Assignment

It refers to the complete transfer of the policy’s ownership to some other individual.

Beneficiary

It refers to a person who will get the death benefit from a life insurance policy on death of the policyholder.

Policyholder

It refers to an individual who owns a given insurance policy.

Premium

It is the amount of money paid regularly to the insurance company to obtain coverage against damage, accident etc.