I can see both sides. When I was psychotic I was delusional and insane. Prior to that I was experiencing symptoms of psychosis on and off although overall, I was fairly 'sane'. Hearing that my symptoms were psychotic even when I was fairly well was the slap in the face I needed at the time. I needed to realize how the little things I was doing were harming me.

I think perhaps terms like psychotic are used to help one understand the nature and severity of the symptoms. You are a well educated patient, so that's not really necessary in your case. However, some patients may benefit from the designation.

I feel like therapy should be customized to the individual. I see nothing wrong with informing your therapist how it makes you feel when that language is used. You can discern from the symptoms what is going on and it is fair for them to know it isn't adding value in your case. It also may help them to reframe how they speak to other patients in the future.