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Protection & Insurance
Plain-language definitions from the time.money glossary.
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Protection & Insurance
6 terms- Emergency Fund
- A pool of easily accessible savings set aside specifically for unplanned expenses (job loss, a medical emergency, urgent repairs), sized to cover a defined number of months of essential expenses, so a shock doesn't force a costly loan or a disruptive sale of long-term investments.
- Health Insurance
- A policy that covers hospitalisation and, depending on the plan, related medical expenses, protecting savings and investments from being liquidated to pay for a medical emergency.
- Life Cover Ratio
- A rule-of-thumb multiple of annual income used to estimate adequate term insurance cover, commonly cited as 10 to 15x annual income, though the right number depends on dependents, existing liabilities, and other assets.
- Protection Gap
- The shortfall between the life or health insurance cover a person actually holds and the cover they'd realistically need to protect their dependents' financial future or absorb a medical shock, one of the most commonly underestimated risks in Indian household finances.
- Sum Assured
- The guaranteed payout amount specified in an insurance policy, payable to the nominee (for life insurance) or the policyholder (for health insurance) on a valid claim.
- Term Insurance
- A pure life insurance policy that pays a lump sum (the sum assured) to nominees if the policyholder dies during the policy term, with no maturity payout if they survive it, making it the most cost-efficient way to buy a large amount of life cover.