Insurance Terms for LIC AAO Exam 2025

Prepare effectively for the LIC AAO Exam 2025 with the essential insurance terms. Understand concepts like premium, sum assured, riders, claim settlement ratio, and reinsurance to strengthen your insurance awareness and boost your exam performance. Regularly revising these insurance terms will not only help you answer direct questions but also improve your understanding of real-world insurance practices.

Insurance Terms for LIC AAO Exam 2025

Preparing for the LIC AAO 2025 Mains Exam requires more than just aptitude and reasoning; it demands a solid understanding of basic insurance concepts. Since the exam tests candidates on insurance awareness, knowing key terms can give you a definite edge. Let’s explore some of the important insurance terms that you must know before appearing for the exam.

Key Insurance Terms for LIC AAO Exam 2025

Familiarity with these terms is crucial for both the exam and your future role as an LIC AAO, ensuring you make informed decisions in your career. Regularly revising these insurance terms will not only help you answer direct questions but also improve your understanding of real-world insurance practices. Familiarity with these concepts is crucial for both the exam and your future role as an LIC AAO, ensuring you make informed decisions in your career.

• Policyholder: The person who buys and owns the insurance policy.
• Insurer: The company that provides insurance coverage and pays claims.
• Life Assured: The person whose life is covered by the insurance policy.
• Premium: Amount paid, one-time or regularly, to keep the insurance policy active.
• Sum Assured: The guaranteed amount paid by the insurer in case of a claim or on maturity.
• Nominee: The person nominated by the policyholder to receive policy benefits on death.
• Maturity: The date when the insurance policy ends and the policyholder receives payment.
• Surrender Value: Amount received if a policy is ended before maturity.
• Bonus: Extra money added to the policy (in participating policies) depending on company profits.
• Lapse: When a policy ends because the premium wasn’t paid on time.
• Revival: Bringing a lapsed policy back in force by paying overdue premiums.
• Riders: Additional benefits bought along with the core insurance policy for extra coverage.
• Underwriting: The process of evaluating risk and setting premium rates by the insurer.
• Grace Period: Extra days after due date given to pay premium before the policy lapses.
• Free-look Period: Number of days allowed to cancel a new policy and get full refund.
• Annuity: Insurance product giving regular payouts after investing a lump sum or installments.
• Endowment Policy: Life insurance plan that gives payment either on maturity or death.
• Whole Life Policy: A policy covering the insured for their entire lifetime.
• Term Insurance: Policy giving life cover for a fixed period; only pays if death occurs in term.
• ULIP: Unit Linked Insurance Plan; combines insurance with investment in market funds.
• Claim: Official request by the policyholder for payment according to policy terms.
• Death Benefit: Money paid to nominee if insured person dies during policy term.
• Survival Benefit: Money paid by insurer if the policyholder survives till a certain date.
• Assignment: Transfer of policy rights to another person or lender.
• Reinstatement: Restoring a lapsed policy to active status by fulfilling conditions.
• Exclusions: Conditions or risks not covered by the insurance policy.
• Proposer: The person who applies for and proposes to take an insurance policy.
• Incontestability Clause: Legal clause stopping the insurer from rejecting claims after 2 years (except for fraud).
• Paid-up Value: Reduced sum assured paid if premiums stop after a minimum time.
• Policy Loan: Loan given by insurer to policyholder against the policy’s surrender value.
• Non-forfeiture Clause: Clause allowing benefits even if premiums are missed after certain years.
• Actuary: Insurance specialist who calculates risks and premium rates using math and statistics.
• Participating Policy: Insurance policy eligible for company profits as bonus.
• Non-Participating Policy: Policy not eligible for company profits/bonus.
• Indemnity: Principle of compensating for actual loss and not making profit from a claim.
• Bancassurance: Selling insurance products through banks.
• Reinsurance: Insurance taken by insurance companies to protect themselves from big losses.
• Moral Hazard: Risk that the insured may act less carefully because they have insurance.
• Physical Hazard: Any physical condition that increases the risk of loss.
• Waiting Period: Initial period in a policy when claims are not payable.
• Group Insurance: Insurance policy covering a group of people (e.g., employees of a company).
• Claim Settlement Ratio (CSR): A measure showing the percentage of claims an insurance company has settled in a year important for reliability.

Why Insurance Terms Matter for LIC AAO 2025

The LIC AAO role involves handling life insurance policies, assisting customers, and ensuring financial security through insurance products. A clear understanding of fundamental insurance terms not only helps you crack the exam but also prepares you for real-world job responsibilities.

Tips to Remember Insurance Terms

• Create flashcards for quick revisions.
• Relate terms with real-life scenarios.
• Practice previous years’ LIC AAO exam papers, focusing on insurance awareness.

Essential Insights for LIC AAO 2025

For LIC AAO 2025, mastering insurance terms is as crucial as practising reasoning or quantitative aptitude. These concepts form the backbone of your role as an Administrative Officer at LIC, where you’ll be dealing with policies, claims, and customer queries daily. Strengthening your insurance vocabulary will not only boost your exam preparation but also make you job-ready.