Common Insurance terms that you should be aware of
Insurance applies to all facets of life. Right from your home & car cover to health & business, insurance is the safety net that covers it all. However, insurance policies are complex and require an in-depth understanding to make the best of them.
Here are some common insurance terms that we all have heard but not understood. Well, it’s time to know some more:
Insurer, Insured, and Nominee
The insurer is the Insurance Company, insured is the person/item in whose name the policy has been bought, and the nominee is the one entitled to receive the insurance benefits in case of the death of the insured.
Assessor
He is evaluation authority appointed by the insurance company to gauge the amount of loss and verify the validity of the claim filed by the insured.
Premium
Premium is the amount paid by the insurer to the insurance company to transfer the risk and collect claim benefits under the policy. It may be a lump-sum or paid at periodic intervals, depending upon the scheme. Premium calculation for each policy is different & based on several variables. In health insurance these variables are age, preexisting.
Sum Insured
It is the total amount of risk coverage, and the claims are paid out of it in proportion to the losses incurred or expenses paid. In the case of health insurance, it would be the amount paid during hospitalization. However, in the case of motor insurance, the sum insured is the declared value of your vehicle after depreciation. Claims are usually capped at the amount insured.
Term and Term Plan
The term refers to the total tenure of the policy. A car policy is generally for a 1-year term, and life policies go more than 15 or 20-year-term. Term Plan, on the other hand, is a low-premium life insurance policy that only pays the sum assured in case of death of the policyholder. If he lives beyond the term, no maturity value is paid.
Insurance Deductibles
Deductibles are often included in the health and property insurance. It is a pre-decided and non-refundable amount paid by the policyholder to the insurer before the policy coverage begins completely. Deductibles are payable even when there are no claims. The higher the deductibles, the lower your premium.
Waiting Period
This is relevant in the health sector where all the diseases mentioned in the policy are not covered from the date of buying insurance. It sometimes takes a waiting period of up to 4 years for all disease clauses to kick in after the policy comes into effect.
Pre-Existing Conditions
Pre-existing conditions would include any medical issues suffered (in case of Health Insurance) or any damage sustained (In case of Motor Insurance) before the policy commencement date. Such conditions are not usually covered by the policy.
Claim
A claim is a request to an insurance company to pay a whole or a part of the sum assured in case of an accident in motor insurance and hospitalization in health insurance. The claim has to be filed in time and supported by relevant documents or photographs. A claim filed for an amount more than the sum assured is often rejected by the insurance company.
Free Look Period
This is the 15 days that the insurance company gives the policyholder to re-assess the terms and conditions of the policy. The period begins from the day you receive the policy documents. If you are not satisfied with the coverage, you may choose to cancel the policy and get back the premium amount. However, the Free Look Period does not apply to a motor insurance policy.
No Claim Bonus
This is the bonus, or the reward given to the policyholder for every claim-free year during the period of the policy. In the case of health insurance, No Claim Bonus (NCB) is also known as a cumulative bonus and is added to the sum insured. Thus, increasing your risk coverage. In auto insurance, No Claim Bonus gets you a discount on the premium payable for the next year.
A good insurance broker takes the pains to explain the insurance lingua to you to ensure clarity & transparency. We, at Suraksha, not only help you in getting the appropriate insurance policy but also offer committed after-sales services to help you file your claims and secure compensation. With over 50 esteemed clients and a portfolio of more than INR 29 billion (USD 400 million), Suraksha is your best friend in the insurance sector. Reach us @ insurance@suraksha.seahwk.com to procure any kind of Construction & Engineering Insurance, Health Insurance packages, Liability Policy, and many more.
