Following our debut post about the importance of insurance, its time to get a basic understanding of insurance terminology. We have compiled a list of common insurance definitions which customers often get confused over. This list is dedicated for those who want to get a basic grasp of insurance jargon but are too embarrassed to ask!
1. Claim: This is a request made by the customer to the insurance company who wishes to recover (usually monetary compensation) after a loss, under the terms of the policy.
2. Benefit: The amount which the insurance company agrees to pay the customer in case an insured event taking place.
3. Premium: The amount paid by the customer in return for a contract of insurance. Premiums are normally paid weekly or monthly.
4. Deductible: This is the amount the policyholder has to pay before the insurance plan starts to cover their claims. Until this particular amount has been settled, the policyholder must pay for all claims out of pocket.
5. Claims incurred: The total number of claims paid in the accounting period.
6. Sum Assured: The amount guaranteed by an insurance policy to pay the policyholder, prior to addition of any bonuses. This can also be called the coverage amount.
7. Maturity: The date when the value of the policy is paid by the insurance firm to the policyholder, and the contract ends. This includes the sum assured and additional bonuses (if any).
8. Annuity: This is where the policyholder deposits a lump-sum money for investment and the contract provides payments at regular intervals for a fixed period of time.
Do you have more terms which need to be explained? Tell us in the comments section!
Disclaimer: The views shared in this blog are based on the macro economic conditions & industry status quo as per the time of publishing.