Common Insurance Terms
Here are the common insurance terms explained.
A
Accident:
An unexpected event that causes injury, damage, or loss.
Agent:
A licensed representative who sells insurance policies and assists policyholders on behalf of an insurer.
Assignment:
The legal transfer of rights or benefits under a life insurance policy to another person or entity.
B
Broker:
An insurance professional who helps customers compare and purchase suitable insurance policies from different insurers.
C
Cancellation:
The termination of an insurance policy before its expiry date.
Claim:
A request made by a policyholder for benefits or compensation under an insurance policy.
Coverage:
The extent of protection and benefits provided under an insurance policy.
Coverage Period:
The duration for which an insurance policy remains active and provides coverage.
D
Deductible:
The fixed amount (portion of a claim) that the policyholder must pay before insurance coverage applies.
Depreciation:
The reduction in the value of an asset over time due to age, use, or obsolescence.
Disclosure:
The legal and moral obligation of both the insurance company and the applicant to fully and accurately reveal all critical information that could influence the policy, premium, or coverage.
E
Embezzlement:
The dishonest or fraudulent use of money or property entrusted to someone’s care.
Exclusions:
Specific situations, conditions, illnesses, treatments, or events that are not covered under a policy.
I
Inclusions:
The benefits, risks, treatments, events, losses, or expenses that are covered under an insurance policy.
Insurance:
A financial arrangement that provides protection/coverage/benefit against specified risks in exchange for a premium.
Insured/Insured Persons/Insured Party:
The individual/entity/asset covered under a health insurance policy.
Insurer:
The insurance company that provides insurance coverage in exchange for a premium.
Insuring Agreement:
The section of a policy that outlines what is covered and under what conditions.
L
Lapse:
The termination of a insurance policy due to non-payment of premium within the permitted period.
P
Policy:
The legal contract that outlines the terms, conditions, coverage, and benefits provided under insurance.
Policyholder:
The person who owns the insurance policy and is responsible for maintaining it.
Portability:
The facility that allows a policyholder to transfer an insurance policy from one insurer to another while retaining eligible benefits.
Premium:
The amount paid to an insurer in exchange for insurance coverage.
R
Reimbursement:
A claim settlement process where the policyholder pays expenses upfront and later receives reimbursement from the insurer, subject to policy terms.
Renewal:
The process of extending the validity of an insurance policy by paying the applicable premium before the policy expires.
S
Sum Insured:
The maximum amount payable by an insurer under a policy in a year.
W
Waiting Period:
The period during which certain policy benefits are not available after the policy begins.