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Insurance Policy Tips: If you are thinking of taking life insurance or health insurance, then taking a policy just by looking at the name of the company or the premium can be your biggest mistake. Before taking an insurance plan, it is important to understand some very important terms and words, so that there is no fraud in the future. Let us know such 8 insurance words and their meanings that every buyer must understand.

Term insurance is a “Protection-only” policy, in which more coverage is available at a low premium, but no money is received on maturity. At the same time, endowment plan also has maturity benefit along with life insurance, but for this you have to pay a very high premium.

Sum assured is the amount that the nominee of the policyholder gets after his death. At the same time, total coverage includes bonuses, riders etc., due to which the total payment amount can be high.

Health insurance policies do not cover all ailments from day one. There is a waiting period of 2 to 4 years for many ailments like diabetes, blood pressure. Also, some treatments like cosmetic surgery are permanently excluded from insurance.

You can add add-ons like critical illness cover, accidental death, premium waiver riders to your insurance policy. But every rider means additional premium cost. So add them only if you really need them.

Insurers often claim their claim settlement ratio (like 98%, 99%) to be high. But don't believe it just by looking at the CSR. See how many high-value claims they have settled and whether they settle claims on time or not.

After getting the policy, you have a free-look period (usually 15 days), in which you can read the policy and cancel it if you find something wrong and get your money back.

Policy term means how many years the policy will run, while premium payment term is the time till which you have to pay the premium. It is very important to understand the difference between the two.

In health insurance, if you do not make any claim in a year, then the next time the coverage increases or the premium may decrease. This is called no claim bonus.