Insurance Glossary

Legally transferring your rights under a policy to someone else — most commonly to a bank, which takes a life policy as security for a loan and is paid from it first if you default. The policy stays on the same life, but the person entitled to the money changes, and the insurer must be told for it to take effect. Unlike a nomination, which you can change at will, an assignment cannot simply be undone.

Most savings-type life plans in Nepal are with-profit, meaning they share in the insurer's surplus through a bonus declared each year and approved by the Nepal Insurance Authority. It accrues inside the policy rather than being paid in cash, and you collect it with the maturity, death, surrender or paid-up claim. The critical point buyers miss: the bonus is declared per Rs 1,000 of sum assured, not on the premiums you have paid, so a headline rate of "Rs 85 per thousand" is nothing like an 85% or even an 8% return on your money.

Cashless means the insurer settles the hospital bill directly so you walk out without paying; reimbursement means you pay first and claim it back with the bills. In Nepal cashless works only inside the insurer's listed network. Read this clause carefully, because some Nepali plans do not fall back to reimbursement outside the network at all — even in an emergency.

A figure quoted as a rough proxy for whether an insurer actually pays. Treat it carefully in Nepal: the Authority does not publish a per-company ratio, so every number in circulation is derived by third parties from published claims-paid and claims-outstanding amounts. That makes it a rupee-value, year-end snapshot that says nothing about how fast a claim was paid or how many were rejected outright. Directional signal, not a guarantee.

How long an insurer has to decide and pay once you have submitted a complete claim. The Insurance Act 2079 itself sets no number — it says claims are settled within the prescribed period — and the actual deadlines sit in the Authority's claim payment guideline, which sets separate clocks for life maturity, death claims, non-life claims following the surveyor's report, and a faster track for small claims. Insurers face fines for missing them. If yours does, or rejects the claim, your escalation is a complaint to the Nepal Insurance Authority.

The fuller motor policy: it pays for damage to your own vehicle as well as covering your third-party liability. Only the third-party element is legally required in Nepal, so comprehensive is optional. One genuinely useful Nepali feature is geography — motor policies here commonly extend cover across the region, including India, rather than stopping at the border.

Nepal's compulsory motor cover does not stop at third parties — it also pays when the vehicle's own driver, crew or passengers are killed or injured, with per-person limits set by the Nepal Insurance Authority's motor tariff. This is a real divergence from India, where compulsory personal accident cover attaches to the owner-driver alone. On a motorcycle it means the pillion passenger is covered too.

A fixed share of every approved bill that you pay yourself, with the insurer covering the rest. It applies on top of your sum insured, not instead of it, and in Nepal it is most often attached to outpatient benefits rather than inpatient ones. The government health scheme applies its own co-payment as well.

The amount your nominee receives if you die while the policy is in force — usually the sum assured plus bonus accrued to the date of death, with any rider benefit on top. Cover exists only while the policy is in force, so a death during a lapsed period is not paid.

When a claim involves replacing a worn part with a new one, the insurer deducts an allowance for the age of the old part and pays only the balance — so you contribute to the repair even on an approved claim. Rubber, tyres, tubes and plastic attract the steepest deductions. Nepali insurers sell a depreciation-waiver add-on that refunds these, though it is usually unavailable on older vehicles.

A savings-plus-protection contract that pays the sum assured plus accrued bonus at the end of the term if you survive, or on death if that comes first. This is the default life product in Nepal and usually the first thing an agent will show you. Endowments are effectively extinct in the UK and US, so foreign commentary calling them obsolete does not describe the Nepali market.

The specific events and situations a policy will never pay for, listed in the policy document. Nepal does not standardise exclusion wording for mainstream life, health and property products, so lists differ meaningfully between insurers and the exclusions page is the part actually worth reading. Recurring examples include self-inflicted injury, war, undeclared hazardous occupations, and everyday non-medical items on a hospital bill.

Nepal runs a contributory state health scheme under the Health Insurance Act 2074 (2017), administered by the Health Insurance Board. Households pay an annual contribution and receive a capped amount of treatment per year, cashless at enrolled facilities, with free enrolment for defined groups such as the very poor, people over 70 and those with severe disability. It works on a referral chain: you start at a registered first service point and step up, and bypassing that chain for non-emergency care is not payable. It is contributory rather than free, and the family ceiling is small enough that one serious hospitalisation can exhaust it — which is why many households treat it as a floor and buy private cover above it. Contribution amounts, ceilings and sub-limits are set by the Board and have changed more than once; check the Board's current terms rather than relying on figures quoted elsewhere.

Extra time after the premium due date in which you can still pay and keep the cover intact — a claim during the grace period is still valid. Nepali insurers commonly allow a longer grace on yearly, half-yearly and quarterly policies than on monthly ones. Miss it and insurers add a late charge set by the company, not by the regulator.

A licensed individual or firm that sells policies on behalf of an insurer and is paid commission by that insurer. Under the Insurance Act 2079 an agent may hold only one licence per kind of insurance, so the person selling to you represents that one company — their advice is sales advice. The same person may hold one life and one non-life licence, but not two of a kind.

A separately licensed professional who inspects the damage and assesses the loss on a non-life claim, then reports to the insurer, who settles on that basis. This is a regulated profession in Nepal, not an insurer job title: surveyors are licensed by the Nepal Insurance Authority, sit an exam, and an individual surveyor may be licensed for only one class of business. If a surveyor behaves improperly you can complain about them to the Authority directly.

A policy lapses when the premium is not paid within the grace period. The contract goes inactive, the insurer is no longer on risk, and a death claim during a lapsed period is not paid. Lapse is one of the persistent problems in the Nepali life market, which is why insurers periodically run amnesty campaigns to bring dead policies back.

Any fact that would change an insurer's decision to cover you or the price it charges: an existing illness, a risky occupation, a past claim, a previously declined application. The Insurance Act 2079 requires both sides to disclose everything factual about the proposed risk in absolute good faith, so concealing a material fact gives the insurer grounds to refuse the claim. Non-disclosure is among the most common reasons claims are rejected.

What the insurer pays if you are alive when the term ends. On a with-profit endowment it is the sum assured plus the bonus accrued over the years. On a money-back plan only the remaining slice arrives at maturity, because the rest was already paid out in instalments. A pure term plan pays no maturity benefit at all.

Two benefits that get confused. Evacuation pays to move you from where you fell ill or were injured to a hospital that can treat you — in Nepal that often means a helicopter off a trail. Repatriation pays to fly you home once stabilised, or to return your remains. Evacuation is the benefit that matters in the mountains, and it is usually capped at a figure well below what a Himalayan helicopter rescue actually costs.

An endowment that returns slices of the sum assured at fixed points during the term instead of holding everything to the end, with the balance plus bonus paid at maturity. The genuinely generous part that buyers miss: on Nepali money-back plans the death benefit is normally the full sum assured, with no deduction for the survival instalments you already collected. Insurers file these as "anticipated" plans, so the same product appears under both names.

Nepal's insurance regulator, formerly Beema Samiti, re-established under the Insurance Act 2079. It licenses insurers, agents, brokers and surveyors and can revoke those licences, approves products before they are sold, sets capital and solvency requirements, and rules on complaints policyholders bring against insurers. "Licensed by the Nepal Insurance Authority" means the company may legally sell in Nepal, its product was approved, and you have a regulator to complain to — it does not mean any individual claim will be paid, and it is not a state guarantee of the payout.

A hospital your insurer has an agreement with, where you can be treated cashless instead of paying and claiming back. Nepali networks are small and heavily concentrated in Kathmandu, and a plan sold nationally can have a network that is effectively Valley-only. Check that a listed hospital is near you, not just that the network sounds large — insurers often count thousands of Indian hospitals in the headline figure.

A discount on your own-damage premium for each consecutive year you renew without claiming. It belongs to you rather than to the vehicle, so it can move with you when you change insurer. The ladder depends on what you drive and is set by the standard tariff: private cars climb the highest, motorcycles and commercial vehicles stop at lower ceilings. Do not assume the car scale applies to a bike — it overstates the discount badly.

The person you name on the policy to receive the payout if you die. Under the Insurance Act 2079 the insurer pays the nominee named in the policy first, and only where there is no surviving nominee does the money pass to the beneficiary under the general law. Naming one — and updating it if that person dies before you — is the cheapest thing you can do to spare your family a slow claim.

The part of a comprehensive policy that pays to repair or replace your own vehicle. In Nepal it typically responds to fire, accidental damage, theft, and — significant here — natural disasters including earthquake, flood, landslide and storm. Your no-claim bonus and any voluntary excess attach to the own-damage premium, not to the compulsory third-party premium.

If you stop paying premiums after the policy has built up value, the contract need not die: the sum assured is cut in proportion to the premiums actually paid, and that reduced amount stays payable at death or maturity. You pay nothing further and the policy stops earning new bonus. This is different from a lapse, where a policy that never built up value simply ends and pays nothing.

Three roles that are often the same person but are not the same thing. The policyholder owns the policy and pays the premium; the life assured is the person whose life is covered, so what happens to them triggers the claim; the nominee is whoever is named to receive the money. They come apart most often when a parent insures a child or a company insures an employee.

How long the insurer stays on risk for you. Nepali savings plans commonly run 10 to 30 years, and money-back plans are sold in fixed blocks. Watch the interaction with age: plans set both a term and a maximum maturity age, and the shorter of the two wins — so an older buyer cannot always take the longest term on offer.

Any illness or injury you already had before the policy began. Nepali insurers exclude these for a fixed number of years rather than forever, and those waits run longer here than buyers expect — periods of two to four years are actively sold. Declare honestly: an undeclared pre-existing condition is grounds for the claim to be rejected and the policy cancelled.

What you pay the insurer to keep the policy in force. Nepali insurers accept yearly, half-yearly, quarterly and monthly payment, and the mode changes your protection as well as your cashflow — monthly policies typically carry a shorter grace period than yearly ones. Life insurance premium paid by a resident individual is deductible from taxable income in Nepal, subject to a ceiling set by the income tax law of the year.

The application form you complete to buy a policy. Under the Insurance Act 2079 the proposal is part of the insurance contract itself, not a throwaway sales document — what is written on it is what the insurer agrees to cover. In Nepal it is frequently filled in by the agent on your behalf, which is exactly why you should read it before you sign it.

Bringing a lapsed policy back to life. In Nepal this normally means a declaration of good health, payment of all overdue premiums with interest or a late fee, and the insurer's acceptance — with medical tests if the lapse has run long or the sum assured is large. Revival is not automatic: the insurer can refuse or re-price you, and some insurers make a revived policy contestable again for a period.

An optional add-on bought alongside the base policy for a small extra premium. The Nepali rider menu is narrow and consistent across insurers: accidental death benefit, permanent total disability, waiver of premium on disability, and critical illness. Riders live and die with the base policy — if it lapses, the rider cover goes with it.

You pay the entire cost of the policy once, up front, and cover runs for the full term with nothing further owed. There is no lapse risk because there are no renewals. Nepali single-premium plans often pay a multiple of the sum assured on death, more than the regular-premium version of the same plan — but the income tax deduction applies in the year you pay, so you get it once rather than every year.

Whether an insurer holds enough assets over and above its liabilities to pay the claims it has promised. The regulator sets a minimum solvency ratio and publishes each company's figure, so you can see which insurers sit comfortably above the line and which are close to it. It matters because a life policy is a promise stretching decades: the premium is cheap today and the payout depends on the company still being there.

What a Nepali property or fire policy covers as standard. Under the Nepal Insurance Authority's Property Insurance Directive the base cover is far wider than the name suggests: fire, lightning, explosion, earthquake, flood, landslide, storm, impact, spontaneous combustion, and riot, strike, malicious damage, sabotage and terrorism are all included. Crucially, the directive forbids an insurer from stripping any of these out — so earthquake is not an optional add-on in Nepal, whatever an insurer's older marketing copy may still say.

A cap on one category of spending inside the policy — the hospital bed, outpatient treatment, diagnostics or pharmacy — that applies regardless of how large your total sum insured is. Nepali policies commonly express the bed limit as a room category you are entitled to rather than a rupee-per-day figure, so ask which class of room the policy actually buys you.

The fixed rupee amount the insurer contracts to pay, and the headline figure on your policy. In Nepal almost everything else is calculated from it: bonus is declared per Rs 1,000 of sum assured, money-back instalments are a percentage of it, and the death benefit is usually it plus accrued bonus. Only the sum assured is guaranteed — the maturity value an agent quotes adds a projected bonus that is not.

The sum insured is the most the policy will ever pay; the market value is what the property is actually worth on the day it is damaged. Insure for materially less than market value and Nepali property policies scale a partial claim down in proportion — insure at half the value and you recover roughly half the loss. Small claims and total losses are generally carved out of that reduction, but under-insuring to save premium is the most expensive mistake in this class of policy.

The cash the insurer pays if you cancel the policy before maturity. Nepali insurers generally require several full years of premium before any surrender value exists at all, and surrendering early returns considerably less than you paid in while ending your cover permanently. A policy loan against the accrued value is usually the cheaper alternative to walking away.

Pure protection with no savings element: it pays out only if you die within the chosen period and nothing if you survive to the end. Because none of the premium goes into savings, it buys far more cover per rupee than any endowment. Note a translation trap in Nepali coverage — सावधिक (sawadhik) means endowment, not term, and is frequently mistranslated, which makes term insurance look far larger in Nepal than it is.

Cover for what you owe other people — their death, injury or damaged property — when your vehicle causes an accident. It pays nothing towards your own vehicle. It is compulsory for every vehicle on Nepali roads, and the limits are set by the Nepal Insurance Authority's motor tariff rather than by each insurer, so this part of the cover does not vary between companies.

Whether a policy pays out while you are trekking, and how high. This is the most misunderstood cover in Nepal, because of a structural point rather than a number: travel insurance sold by Nepali insurers is an outbound product for Nepalis and residents travelling abroad, so it is not in force while you trek in Nepal at all. What Nepali insurers sell for trekking is a separate personal accident policy — unusually good in that it treats altitude sickness, snow blindness and frostbite as accidents rather than excluding them, but medical expenses and search and rescue are optional extensions rather than part of the base cover. Foreign trekkers generally buy from international insurers, where the altitude ceiling and any helicopter sub-limit are the two clauses worth reading before anything else.

The insurer's process of deciding whether to cover you at all, on what terms and at what price — based on age, health and occupation for life and health cover, or construction, use and occupancy for property. It happens before the policy is issued, and it is only as good as the information on your proposal form.

An amount you agree upfront to pay yourself on any own-damage claim, chosen in exchange for a lower premium. Pick a higher excess and you pay less each year but more when you actually claim. It applies to own-damage claims only and does not reduce what a third party is paid. Nepali insurers call this "excess"; "deductible" means the same thing.

The stretch at the start of a health policy when you are paying premiums but cannot claim. Nepali policies typically apply a short initial waiting period during which only accidental emergencies are payable, then stack longer waits on named treatments and on pre-existing conditions. Nepal has no regulator-imposed ceiling on waiting periods, so the number must be read off the specific policy rather than assumed.

Cover that runs for your whole life rather than ending on a fixed maturity date, paying the sum assured plus accrued bonus whenever death occurs. Nepali insurers sell both full-payment and limited-payment versions. It is a traditional with-profit contract paying a declared bonus, not the flexible cash-value investment account the same name describes in the United States.