Interactive Tool
Insurance Jargon Decoder
Type any insurance or financial term you do not understand. Get a plain-English explanation with real examples. No jargon in our jargon definitions.
47 terms found
Plain English Definition
The process of repaying a loan through scheduled instalments over time, where each EMI is split between principal repayment and interest payment. The interest portion is highest at the start and decreases over the loan tenure.
Why It Matters
Understanding amortization reveals why prepaying early saves far more interest than prepaying later. A single extra EMI in the first year of a 20-year home loan can shave months off the end of the tenure.
Example
Rs 40 lakh home loan at 9%, 20 years. First month EMI of Rs 35,989: Rs 30,000 is interest, Rs 5,989 is principal. After 10 years: Rs 15,500 is interest, Rs 20,489 is principal.
Plain English Definition
The total market value of all investments that a mutual fund, PMS, or financial institution manages on behalf of clients. For mutual funds, AUM = Units Outstanding x Current NAV.
Why It Matters
Large AUM indicates investor confidence but can reduce agility in small/mid-cap funds. Very small AUM (below Rs 100 crore) may indicate risk of scheme closure or merger. For debt funds, larger AUM means better liquidity.
Example
A mutual fund scheme has 10 crore units outstanding at NAV of Rs 50. Its AUM is Rs 500 crore. Investors pour in Rs 100 crore more. AUM grows to Rs 600 crore.
Plain English Definition
Ayurveda, Yoga, Unani, Siddha, and Homeopathy — alternative medicine systems recognized by the Indian government. Many health policies now cover AYUSH treatments.
Why It Matters
If you prefer Ayurvedic or Homeopathic treatments, check if your policy covers AYUSH. Some cover it fully at NABH-accredited centres; others have a sub-limit or exclude it entirely.
Example
You undergo a 10-day Panchakarma treatment at an AYUSH hospital costing Rs 80,000. If your policy covers AYUSH, the insurer reimburses this amount subject to policy terms.
Plain English Definition
One basis point equals 0.01 percentage points (1/100th of a percent). Used by financial professionals to express small changes in rates without ambiguity. 100 bps = 1%.
Why It Matters
A seemingly small 25 bps difference in home loan rate translates to Rs 3 lakh difference in total interest on a Rs 75 lakh loan over 20 years. In mutual funds, every basis point of expense ratio compounds against you.
Example
RBI announces a 50 bps rate cut. This means interest rates decrease by 0.50 percentage points. Your home loan rate drops from 9.00% to 8.50%.
Plain English Definition
The smoothed annualized rate of return over a period, assuming profits are reinvested. Calculated as (Ending Value / Beginning Value) raised to (1/years) minus 1.
Why It Matters
CAGR is the standard way to compare returns across asset classes and time periods. It strips out year-to-year volatility to give a single comparable number. But it does not show the drawdowns you experienced along the way.
Example
You invested Rs 1 lakh in 2020. It is worth Rs 1.61 lakh in 2025 (5 years). CAGR = (1.61/1)^(1/5) - 1 = 10%.
Plain English Definition
A facility where the insurer directly settles the hospital bill with the network hospital. You do not pay upfront (except for non-covered items).
Why It Matters
Cashless claims eliminate the financial stress of arranging large sums during a medical emergency. But this only works at network hospitals listed by your insurer.
Example
You are admitted to a network hospital for appendix surgery costing Rs 2.5 lakh. The hospital sends the pre-authorization to your insurer, who approves it. You sign the forms and leave without paying the covered amount.
Plain English Definition
A credit score between 300-900 from TransUnion CIBIL that represents your creditworthiness. Based on repayment history (35%), credit utilization (30%), credit age (15%), credit mix (10%), and recent enquiries (10%).
Why It Matters
A score above 750 can get you 0.25-0.5% lower interest rates, saving lakhs over a 20-year home loan. Below 650 often means outright loan rejection. Checking your score does not lower it (soft inquiry vs hard inquiry).
Example
CIBIL score of 780: you get a home loan at 8.5%. Score of 650: same bank offers 9.5% or rejects. On a Rs 50 lakh loan over 20 years, the 1% difference costs Rs 7.6 lakh extra in interest.
Plain English Definition
A fixed percentage of every claim that you must pay out of your own pocket. The insurer covers the rest.
Why It Matters
A 20% co-payment sounds small but means Rs 1.6 lakh out of pocket on an Rs 8 lakh bill. Co-payments are common in senior citizen and budget policies.
Example
Policy has 10% co-payment. Hospital bill is Rs 5 lakh. You pay Rs 50,000. Insurer pays Rs 4.5 lakh.
Plain English Definition
Insurance that pays a lump sum on diagnosis of specified critical illnesses (cancer, heart attack, stroke, kidney failure, major organ transplant). Payment is regardless of actual hospital expenses.
Why It Matters
Regular health insurance covers hospital bills but not income loss, rehabilitation, or lifestyle changes after a critical illness. The lump sum bridges this gap. It can be standalone or a rider on term/health plans.
Example
You are diagnosed with Stage 2 cancer. Your critical illness policy of Rs 25 lakh pays the full Rs 25 lakh upon diagnosis, regardless of whether your treatment costs Rs 5 lakh or Rs 20 lakh.
Plain English Definition
Similar to NCB but with a key difference: some insurers let you retain cumulative bonus even after a claim, or reduce it only partially rather than resetting entirely.
Why It Matters
Policies with cumulative bonus that does not reset on claims provide much better long-term value. This is an important differentiator when comparing health plans that otherwise look similar.
Example
You have 40% cumulative bonus over 4 years. You make a claim this year. Instead of losing all 40%, your insurer reduces it to 20%. Next year, you start building from 20% again.
Plain English Definition
Medical treatment or surgery that takes less than 24 hours and does not require overnight hospitalization. Examples include cataract surgery, chemotherapy, dialysis, and angiography.
Why It Matters
Standard health insurance requires 24-hour hospitalization for claims. Without daycare coverage, procedures that modern medicine has made quick (under 24 hours) would not be covered.
Example
You undergo cataract surgery (4 hours, no overnight stay). Under the daycare provision, your insurer covers the Rs 60,000 procedure even though you were not admitted for 24 hours.
Plain English Definition
A valuation method that estimates what an investment is worth today based on projections of how much money it will generate in the future, with each future payment discounted back to its present value.
Why It Matters
DCF is the gold standard for company valuation in investment banking and equity research. It forces explicit assumptions about growth, margins, and risk — exposing the real drivers of value.
Example
A company is projected to generate Rs 10 crore free cash flow next year, growing at 15% for 5 years. Discounted at 12% WACC, the present value of these cash flows determines the company's intrinsic value.
Plain English Definition
A fixed amount you must pay before your insurance kicks in. Different from co-payment: deductible is a flat amount, not a percentage.
Why It Matters
Super top-up plans use deductibles to keep premiums low. A Rs 50 lakh super top-up with Rs 5 lakh deductible costs just Rs 5,000-8,000/year for a 30-year-old.
Example
Your super top-up has a Rs 5 lakh deductible. You are hospitalized for Rs 8 lakh. You pay the first Rs 5 lakh (covered by your base plan), and the super top-up covers the remaining Rs 3 lakh.
Plain English Definition
Medical treatment taken at home when the patient cannot be transported to a hospital or when hospital beds are unavailable. Coverage requires the condition to last more than 3 consecutive days.
Why It Matters
This became crucial during COVID-19 when hospitals were overwhelmed. Policies with domiciliary coverage provide a safety net for home treatment during health crises.
Example
During a pandemic surge, no hospital beds are available. You receive medical treatment at home for 5 days costing Rs 1.2 lakh. Your policy's domiciliary hospitalization benefit covers this.
Plain English Definition
A bilateral treaty between India and another country to prevent the same income from being taxed in both jurisdictions. India has DTAAs with 90+ countries.
Why It Matters
Without DTAA, NRIs would pay tax on Indian income in both India and their country of residence. DTAA provides either exemption in one country or a tax credit mechanism. You must actively claim the benefit.
Example
You are an NRI in the US earning Rs 5 lakh rent from an Indian property. Under the India-US DTAA, you pay tax in India and claim a Foreign Tax Credit in the US to avoid double taxation.
Plain English Definition
A fixed monthly payment to repay a loan, comprising both principal and interest components. Calculated on the reducing balance method where the interest portion decreases over time.
Why It Matters
Financial advisors recommend total EMIs not exceeding 40-50% of take-home income. On a Rs 50 lakh home loan at 8.5% for 20 years, you pay Rs 54 lakh in interest alone — more than the principal.
Example
Rs 30 lakh home loan at 8.5% for 20 years: EMI is Rs 26,035. In the first month, Rs 21,250 is interest and only Rs 4,785 goes to principal. In the last month, Rs 184 is interest and Rs 25,851 is principal.
Plain English Definition
The annual fee a mutual fund charges for management, administration, and operations, expressed as a percentage of assets. It is deducted from the fund's NAV daily.
Why It Matters
Over a 20-year SIP, the difference between a 0.5% and 2% expense ratio can reduce your final corpus by 20-25%. Index funds charge 0.1-0.3%; active funds charge 1-2.5%.
Example
You invest Rs 10 lakh in a fund with 2% expense ratio. Each year, Rs 20,000 is deducted as fees. Over 20 years, compounded, this fee eats into Rs 5-6 lakh of potential gains.
Plain English Definition
A health insurance plan covering the entire family under a single shared sum insured. Any member can claim up to the full amount, but total payouts across all members cannot exceed the sum insured in a year.
Why It Matters
Floaters cost less than separate individual policies. The risk is sum insured exhaustion if multiple members are hospitalized the same year. For families with elderly parents, a combination of floater + individual is often optimal.
Example
A Rs 10 lakh family floater covers you, your spouse, and 2 children. Your spouse is hospitalized for Rs 7 lakh. The remaining Rs 3 lakh is left for the rest of the family for the rest of the year.
Plain English Definition
A 15-30 day window after receiving your policy document during which you can return the policy for a full refund (minus stamp duty and medical exam costs).
Why It Matters
This is your safety net against mis-selling. If the agent promised features the policy does not have, exit during the free look period with no financial loss.
Example
You receive your health policy document on March 1. By March 15, you realize it has room rent sub-limits the agent never mentioned. You invoke the free look period and get your premium refunded.
Plain English Definition
The daily rate for Intensive Care Unit admission, typically 2-5 times the regular room rent. In metro hospitals, ICU can cost Rs 15,000 to Rs 50,000 per day.
Why It Matters
Many policies cap ICU charges at 2x the room rent limit. If your room rent limit is Rs 5,000/day, ICU is capped at Rs 10,000/day — dangerously low for metro hospitals where ICU costs Rs 25,000-50,000/day.
Example
Your policy allows Rs 5,000/day room rent. ICU sub-limit is 2x = Rs 10,000/day. Actual ICU cost is Rs 30,000/day. You pay the difference of Rs 20,000/day out of pocket for each ICU day.
Plain English Definition
A health insurance plan that covers one person with a dedicated sum insured. Unlike a floater, your coverage is not shared with anyone else.
Why It Matters
Individual policies guarantee that your coverage is always available to you, regardless of other family members' claims. They are essential for members with high health risks, such as elderly parents.
Example
You buy a Rs 10 lakh individual policy for your father (age 62). He is hospitalized twice: Rs 4 lakh and Rs 5 lakh. Both are fully covered since his Rs 10 lakh is not shared with anyone.
Plain English Definition
Medical treatment requiring formal hospital admission for at least 24 hours (or daycare procedures specifically covered). This is what standard health insurance covers.
Why It Matters
Understanding the IPD requirement explains why your insurer rejects claims for outpatient treatments. The 24-hour admission criterion is the fundamental threshold for health insurance claims in India.
Example
You are admitted for knee arthroscopy (2-day stay). This qualifies as IPD. Your health insurance covers the Rs 1.5 lakh bill because it meets the 24-hour admission criterion.
Plain English Definition
Tax on profits from selling assets held beyond a threshold period. For equity: 12 months, taxed at 12.5% on gains above Rs 1.25 lakh. For debt (post April 2023): taxed at slab rate regardless of holding period.
Why It Matters
Timing your asset sales around the LTCG threshold can save significant tax. Selling equity at 11 months triggers 20% STCG; waiting one more month brings it down to 12.5% LTCG with a Rs 1.25 lakh exemption.
Example
You sell equity mutual fund units after 14 months with Rs 2 lakh profit. LTCG = Rs 2 lakh - Rs 1.25 lakh exemption = Rs 75,000 taxable at 12.5% = Rs 9,375 tax.
Plain English Definition
After 8 years of continuous health insurance coverage, the insurer cannot reject claims based on non-disclosure of pre-existing conditions (IRDAI rule since 2020).
Why It Matters
This protects policyholders who genuinely forgot to declare a condition. After 8 continuous years, even undisclosed conditions become covered. This makes starting early essential.
Example
You did not declare mild hypertension when buying insurance in 2016. In 2025 (after 9 continuous years), a hypertension-related claim cannot be rejected for non-disclosure.
Plain English Definition
The per-unit price of a mutual fund, calculated daily as (Total Assets minus Total Liabilities) divided by total outstanding units.
Why It Matters
NAV does not indicate whether a fund is cheap or expensive. A fund with NAV of Rs 500 is not costlier than one with NAV of Rs 50 — only the percentage return matters. Do not fall for the low-NAV myth.
Example
You invest Rs 50,000. Fund NAV is Rs 100. You get 500 units. Next month, NAV rises to Rs 110. Your investment is now worth Rs 55,000 (500 units x Rs 110).
Plain English Definition
A reward for not making claims in a policy year. In health insurance, NCB increases your sum insured by 10-50% per claim-free year. In motor insurance, it gives a premium discount.
Why It Matters
After 5 claim-free years, NCB can increase your sum insured by 50-100% at no extra cost. Filing small claims destroys years of accumulated NCB — think carefully before claiming amounts below Rs 15,000-20,000.
Example
Your Rs 10 lakh health policy has accumulated 50% NCB over 5 years. Your effective cover is now Rs 15 lakh. You file a Rs 15,000 claim. Next year, your NCB resets and your cover drops back to Rs 10 lakh.
Plain English Definition
A government pension scheme offering equity, corporate bond, and government security investment tiers. Provides an additional Rs 50,000 tax deduction under Section 80CCD(1B) beyond 80C.
Why It Matters
NPS has the lowest expense ratio of any investment vehicle in India (below 0.1%). The extra Rs 50,000 deduction saves Rs 15,600 at the 31.2% slab. However, 40% of the corpus must be mandatorily annuitized at retirement.
Example
You invest Rs 50,000/year in NPS for 25 years with 10% equity returns. Corpus: ~Rs 55 lakh. At retirement, 60% (Rs 33 lakh) is tax-free withdrawal. 40% (Rs 22 lakh) must buy an annuity paying ~Rs 1.1 lakh/year.
Plain English Definition
Non-Resident External account for NRIs to deposit foreign earnings in India. Principal and interest are fully repatriable. Interest earned is completely tax-free in India.
Why It Matters
NRE FDs offer 7-8% tax-free interest — far higher than savings rates in the US, UK, or Middle East. The catch is currency risk: rupee depreciation against your home currency reduces real returns.
Example
You earn in USD and deposit Rs 20 lakh in an NRE FD at 7.5%. After one year, you earn Rs 1.5 lakh in interest — completely tax-free in India. You can transfer the full Rs 21.5 lakh back abroad freely.
Plain English Definition
Medical treatment where you visit for consultation, tests, or minor procedures and return home the same day. Includes doctor visits, diagnostics, pharmacy purchases, and physiotherapy.
Why It Matters
Standard health insurance does NOT cover OPD expenses. OPD add-ons (Rs 5,000-15,000/year reimbursement) can be valuable for families with chronic conditions requiring frequent doctor visits and medicines.
Example
You visit a dermatologist (Rs 1,000 consultation), get blood tests (Rs 3,000), and buy prescribed medicines (Rs 2,000). Total OPD spend: Rs 6,000. Without OPD add-on, none of this is covered.
Plain English Definition
Insurance that provides a lump sum in case of death or permanent disability due to an accident. It may also cover temporary disability, medical expenses, and ambulance costs.
Why It Matters
Accidents are the leading cause of death for Indians aged 18-45. PA cover is affordable (Rs 500-2,000/year for Rs 10-25 lakh) and fills a gap that term insurance (death only) and health insurance (hospitalization only) do not fully address.
Example
A road accident causes permanent loss of one limb. Your PA policy with Rs 20 lakh sum insured pays Rs 10 lakh (50% for loss of one limb as per policy schedule). Your health insurance separately covers the hospitalization costs.
Plain English Definition
The right to switch your health insurance from one company to another while retaining accumulated waiting period credits and NCB. Mandated by IRDAI.
Why It Matters
Portability prevents insurer lock-in. If your insurer has poor claim service, you can switch to a better one without losing years of waiting period credits. Apply at least 45 days before your renewal date.
Example
You have completed 3 years with Insurer A. You port to Insurer B. Your pre-existing disease waiting period (which was 4 years) now has only 1 year remaining at Insurer B.
Plain English Definition
A government-backed 15-year savings scheme offering 7.1% annual interest (reviewed quarterly). Maximum Rs 1.5 lakh/year contribution. Has EEE tax status: contribution, interest, and maturity are all tax-free.
Why It Matters
For risk-averse investors in the 30% bracket, PPF's effective pre-tax yield exceeds 10%. The lock-in discourages impulsive withdrawals, making it an excellent forced-savings vehicle for long-term goals.
Example
You invest Rs 1.5 lakh per year in PPF for 15 years (total: Rs 22.5 lakh). At 7.1%, your maturity amount is approximately Rs 40.7 lakh. The entire Rs 18.2 lakh in interest is completely tax-free.
Plain English Definition
Any illness, injury, or medical condition diagnosed before or at the time of buying the policy, including conditions showing signs or symptoms even if not formally diagnosed.
Why It Matters
PED waiting periods (2-4 years) are the most common reason for claim rejections. Declaring all conditions honestly at the time of purchase is crucial — non-disclosure can void your entire policy.
Example
You have been taking thyroid medication for 2 years. This is a pre-existing disease. If your policy has a 4-year PED waiting period, thyroid-related hospitalizations are not covered until year 5.
Plain English Definition
The process where you pay the hospital bill first and then file a claim with your insurer to get the money back. Required when you visit a non-network hospital.
Why It Matters
Reimbursement claims take 15-30 days to process. You need to arrange the full amount upfront and manage the paperwork. This is why cashless is almost always preferable.
Example
You are treated at a non-network hospital and pay Rs 3 lakh. You submit bills, discharge summary, and claim form to your insurer, who reimburses Rs 2.8 lakh (after deducting non-payable items) in 20 days.
Plain English Definition
The interest rate at which RBI lends money to commercial banks. All new floating-rate retail loans (since October 2019) are linked to an external benchmark, primarily the repo rate.
Why It Matters
A 25 bps repo rate cut directly reduces your floating-rate home loan EMI. Understanding repo rate trends helps you time loan decisions and choose between fixed and floating rates.
Example
RBI cuts repo rate by 50 bps from 6.5% to 6.0%. Your home loan (repo + 2.5% spread) drops from 9.0% to 8.5%. On Rs 50 lakh over 20 years, your EMI reduces by Rs 1,800/month.
Plain English Definition
A feature that refills your sum insured after it is exhausted, so you have coverage for subsequent hospitalizations in the same year.
Why It Matters
Without restoration, exhausting your sum insured in one hospitalization leaves you completely uninsured for the rest of the year. The best plans offer 100% restoration for unrelated illnesses.
Example
Your Rs 10 lakh sum insured is fully used in a surgery. Two months later, a family member needs hospitalization. Restoration benefit refills the Rs 10 lakh for this second, unrelated illness.
Plain English Definition
A sub-limit that restricts the daily room rent covered by your policy. Usually expressed as a fixed amount per day or a percentage of sum insured (e.g., 1% of SI per day).
Why It Matters
Room rent capping triggers proportionate deduction on the entire claim, not just the room charges. This is the single biggest gotcha that catches policyholders off guard during hospitalization.
Example
Your policy covers Rs 4,000/day room rent. Hospital room costs Rs 8,000/day. The proportionate deduction ratio is 50%, applied to your entire bill of Rs 6 lakh. You receive only Rs 3 lakh instead of Rs 6 lakh.
Plain English Definition
A provision of the Income Tax Act that allows deductions of up to Rs 1.5 lakh per year for specified investments and expenses: PPF, ELSS, EPF, life insurance premium, tuition fees, NSC, home loan principal, and more.
Why It Matters
For someone in the 30% tax bracket, fully utilizing 80C saves Rs 46,800 in tax (including cess). Most salaried Indians use EPF contribution and home loan principal to fill a large portion of this limit.
Example
Your EPF contribution is Rs 72,000/year. You invest Rs 50,000 in ELSS. You pay Rs 28,000 in life insurance premium. Total: Rs 1,50,000. Full 80C deduction claimed. Tax saved: Rs 46,800 (at 31.2% effective rate).
Plain English Definition
Allows tax deductions on health insurance premiums: up to Rs 25,000 for self and family, plus Rs 25,000 for parents (or Rs 50,000 if parents are senior citizens). Additional Rs 5,000 for preventive health check-ups.
Why It Matters
Section 80D is over and above the Section 80C limit, providing additional tax savings of Rs 7,800-31,200 depending on your age and your parents' age.
Example
You pay Rs 20,000 premium for family health insurance and Rs 35,000 for senior citizen parents. You claim Rs 20,000 + Rs 35,000 (capped at Rs 50,000) = Rs 55,000 deduction under 80D.
Plain English Definition
A method of investing a fixed amount in mutual funds at regular intervals (usually monthly). Your bank auto-debits the amount and buys mutual fund units at the prevailing NAV.
Why It Matters
SIP removes the emotion and timing from investing. Through rupee cost averaging, you automatically buy more units when prices are low. Historical data shows SIPs in equity funds have delivered 12-15% CAGR over 10+ year periods.
Example
You set up a Rs 10,000 monthly SIP in a Nifty 50 index fund. Over 15 years (Rs 18 lakh invested), your corpus grows to approximately Rs 50 lakh at 12% CAGR.
Plain English Definition
A cap on specific categories of medical expenses within your overall sum insured. Common sub-limits include room rent, ICU charges, ambulance, and specific disease treatments.
Why It Matters
Sub-limits are the most dangerous hidden clause in health insurance. A Rs 20 lakh policy with a 1% room rent sub-limit effectively caps your room rent at Rs 20,000/day, and if you exceed it, proportionate cuts apply to your ENTIRE bill.
Example
Your Rs 10 lakh policy has a room rent sub-limit of Rs 5,000/day. You choose a Rs 10,000/day room. The insurer proportionately reduces ALL charges by 50% — surgery, medicines, everything. Your effective coverage becomes Rs 5 lakh.
Plain English Definition
The maximum amount your insurance company will pay for covered claims in a policy year. Think of it as the ceiling of your coverage.
Why It Matters
Medical inflation in India runs at 14-15% annually. A Rs 5 lakh sum insured purchased 3 years ago is effectively worth only Rs 3.3 lakh in today's hospital prices.
Example
If your sum insured is Rs 10 lakh and your hospital bill is Rs 12 lakh, you pay the extra Rs 2 lakh from your pocket.
Plain English Definition
A health insurance plan that covers expenses above a deductible, but the deductible can be breached by AGGREGATE claims across the year, not just a single claim.
Why It Matters
Super top-ups are the most cost-effective way to boost coverage. A Rs 50 lakh super top-up with a Rs 5 lakh deductible costs Rs 5,000-8,000/year. Combined with a base plan matching the deductible, you get massive coverage cheaply.
Example
Super top-up with Rs 5 lakh deductible. Claim 1: Rs 3 lakh. Claim 2: Rs 4 lakh. Total: Rs 7 lakh. The aggregate crosses the Rs 5 lakh threshold, so the super top-up pays Rs 2 lakh.
Plain English Definition
A health insurance plan that covers expenses above a deductible threshold. The key requirement: the deductible must be breached in a SINGLE claim, not across multiple claims in a year.
Why It Matters
The single-claim deductible makes regular top-ups less useful than super top-ups. If you have two hospitalizations of Rs 3 lakh each (total Rs 6 lakh) with a Rs 5 lakh deductible, neither triggers the top-up individually.
Example
Top-up with Rs 5 lakh deductible. Claim 1: Rs 3 lakh. Claim 2: Rs 3 lakh. Total: Rs 6 lakh. But neither crosses the Rs 5 lakh threshold individually, so the top-up pays nothing.
Plain English Definition
A company licensed by IRDAI that processes health insurance claims on behalf of insurers. They handle cashless approvals, documentation, and claim settlements.
Why It Matters
A slow or inefficient TPA can delay your cashless approval at the hospital, forcing you to arrange cash for deposits. Some insurers now handle claims in-house, which is often faster.
Example
You are admitted to a hospital and request cashless treatment. The hospital sends documents to the TPA, who verifies and approves the claim within 2-4 hours (ideally).
Plain English Definition
The blended cost of a company's debt and equity financing, weighted by their proportions. Used as the discount rate in DCF valuations.
Why It Matters
A company must earn returns above its WACC to create shareholder value. WACC is also the minimum hurdle rate for evaluating new projects and acquisitions.
Example
Company has 60% equity (cost 14%) and 40% debt (cost 8%, tax rate 25%). WACC = 60% x 14% + 40% x 8% x (1-25%) = 8.4% + 2.4% = 10.8%.
Plain English Definition
The time after buying a policy during which certain claims are not covered. There are three types: initial (30 days), specific disease (1-2 years), and pre-existing disease (2-4 years).
Why It Matters
Waiting periods are the number one reason for health insurance claim rejections. Buying insurance early — before conditions develop — eliminates this risk.
Example
You buy health insurance on Jan 1. You are diagnosed with a kidney stone on Feb 15. Claim denied — the 30-day initial waiting period has not elapsed.
Want deeper definitions?
Our financial glossary has 50+ terms with detailed explanations, regulatory context, and links to relevant calculators.
Explore Full Glossary