Are you planning to get an insurance for yourself or for your possessions? It is important to understand what you are getting into and what you are investing your money in before signing any documents.
While you do not have to be an expert in insurance, it would not hurt to know the most common terms you might hear or read in order to make an informed decision.
- Insurer – This refers to the company that will accept the risks after the pays claims and premiums are received.
- Insured – It means that the party or person has an insurance against risks and is the one paying the insurance.
- Beneficiaries – The person/s to whom the policy will be paid in case something happens to you.
- Broker – A professional who advises people who want to get insured. The broker can act as your agent.
- Premium – It refers to the amount you pay regularly in installments to the company based on the agreed amount in the insurance policy.
- Commission – The money that is paid to the brokers who are selling the insurance. The commission is paid by the insurer.
- Excess – It refers to the amount you must pay if you want to claim your policy. The amount will depend on what is specified in the policy.
- Liability – It refers to your responsibility of the adverse actions you might have taken or the lack thereof.
- Third Party – Another person, company, or group of people that may be affected by your actions. The other parties are you and the company.
- Sum Insured – Premiums are calculated based on this factor. It is the value of the goods at risk or the goods you want to insure.
- Indemnity – This is the sum of money paid as a compensation in case of loss or other financial burden.
- Damages – This refers to the monetary compensation for a breach of contract or a civil wrong. The compensation is given to the party affected.
- Reinsurance – The act of transferring all or part only of the risk to another company. This is usually done to reduce the amount commensurate with the financial resources in case of loss.
- Double Insurance – If a subject is insured in two or more companies, the total sum insured exceeds its value. You can have a person or item insured twice but with different insurers.
- Deductible – This refers to the amount you have to pay for damages sustained from your own pockets before the insurance can start to pay.
- Co-Payment – Half or some of the fee that you pay for medical visits while half of it is paid by the insurance provider.
- Face Amount – This is the amount of money the insurance policy will pay if the insured dies.
- Coverage – This can be term or whole life coverage in most insurance companies. Coverage specifies the period of time or term with a defined end date.