21 Common Terms Found in Your Insurance PolicyーAnd What They Mean

The topic of insurance can be quite technical. The terms used are specific in their meanings, and you need to understand them in order to know what you are–and what you're not–entitled to.

Whether it is your first time to encounter these terms or you simply need a refresher, here is a list of commonly used words in insurance and what they mean.

1. The life insured refers to the person the life insurance policy covers. With a life insurance policy, the life assured is protected against the risk of an untimely death.
   
   
2. An accidental death benefit is a payment given to the beneficiary of a death covered by an accidental death insurance policy, which is usually an additional clause in a life insurance policy.
   
   
3. A claim is a formal request you make to the insurance company for compensation when a loss occurs.
   
   
4. Covered loss is the financial loss the insurance company will compensate for under the agreements of the insurance policy.
   
   
5. Death benefit is the amount the insurance company pays the nominee if the life assured dies during the coverage period of the policy.
   
   
6. A deductible is an amount the insured has to pay before the insurance company pays for the covered losses.
   
   
7. Disability income pays a portion of the income of the insured who is disabled and cannot work because of an injury or illness.
   
   
8. Exclusions are losses or situations outlined in the policy that are not covered by the insurance. The insurance company does not have to pay for benefits if the claim falls under an exclusion.
   
   
9. The grace period is the extension provided by the insurance company to the policyholder to pay for the premiums that are already due. If the policyholder is unable to pay the premiums before the end of the grace period, the policy lapses.
   
   
10. Health insurance is a type of insurance that pays for the medical expenses incurred by the insured.
    
    
11. Liability is the legal responsibility for the loss another person.
    
    
12. Maturity age is a term in life insurance that indicates the maximum age that the life insurance coverage will apply to the insured.
    
    
13. Maturity benefit is the amount paid by the insurance company under a life insurance policy when the life assured outlives the policy tenure. It is also known as a survival benefit.
    
    
14. A beneficiary is a person named by the policyholder to receive the sum assured and other benefits given by the insurance company in case an insured event occurs.
    
    
15. A policy contract is a document provided by the insurance company that outlines the terms of the insurance policy, including its specific coverage and exclusions.
    
    
16. Policyholder refers to the owner of the policy and is the one paying for the premiums. The policyholder is not necessarily the same as the life assured.
    
    
17. Policy tenure is how long the policy will provide insurance coverage. It is also called a policy term.
    
    
18. Premium is the amount of money you agree to pay your insurance company in exchange for insurance coverage.
    
    
19. The Reinstatement period is the time provided to the policyholder to reinstate a lapsed policy.
    
    
20. Riders are features in an insurance policy that widen its scope or coverage in exchange for an additional cost.
    
    
21. Sum assured is the amount the insurance company agrees to pay upon the death of the insured person or some other insured event.

Availing of insurance is not just a financial concept. It also creates a legal obligation between you and your insurance company to abide by the agreements listed in the policy. More importantly, it creates an expectation of protection for you and your family. When you know the meaning of each term in your insurance plan, then you gain a full understanding of what the policy entails.

Ready to start securing protection for your future? Get in touch with one of our Bancassurance Sales Executives by filling out this inquiry form today.