Understanding the true meaning behind your policies insurance terms.
Understanding exactly what you’re reading when dealing with your insurance policy is imperative. Insurance policies are notoriously difficult to understand. But, simply having a better understanding of insurance terms and definitions may make the difference between having a reliable plan that covers you for most of your medical expenses and unreliable cover that leaves you paying thousands of Rands.
After all, it’s important to know what you’re getting yourself into and how you are protecting yourself. You don’t want to be disappointed or surprised down the road because you didn’t understand the insurance terms and conditions of your policy.
Here is a list of the most important insurance terms you need to familiarize yourself with
A – From Actuaries to Insurance Agents
Accidental Death Benefit
An accidental death benefit is an additional benefit which pays out to the beneficiary should death occur due to an accident. There are, of course, certain limits or exclusions such as the time of the incident and the age of the deceased.
An actuary is a specialist in the mathematics of insurance. An actuary calculates rates, dividends, reserves and other statistics.
Also known as an assessor. This is a representative of the insurance company who will determine the extent of the insurer’s liability for loss when a claim is submitted.
A person who sells and services insurance policies. An independent agent may represent up to two or more insurance companies and earn a commission based on a percentage of premiums paid. A direct agent, on the other hand, represents only one insurance company – the one they work for – and will only sell products offered by that insurer.
An agreement by an insurer to make periodic payments that continue during the survival of the annuitant(s) or for a specified period.
Defined as a property or financial commodity which can, if need be, be converted into cash.
This insurance term refers to a policy condition related to the insuring of your items. It is important to ensure them for their full replacement value. If you don’t, the average applies. This means that your claim payment will be reduced if the items are underinsured.
B – Brokers And Benefits
With regards to health insurance, the benefit period refers to the number of days in which benefits are paid out to the person insured and their dependents.
A broker is an insurance salesperson, acting as an intermediary, who searches the marketplace for the best possible insurance products in the interest of clients, not the insurance companies. A broker-agent may represent certain insurance companies but will not prefer one over another. The broker-agent still acts in the interest of the client and will source the optimal products available.
This type of policy covers the costs of repairing or replacing the structure of a house or building in the event of damage. Damage could be caused by flooding, fire, lightning or natural disasters. This usually includes garages, outhouses, gates and boundary walls or fences
C – Claims to Coverage
In the event of an unfortunate incident, death or disability or a natural disaster damaging your home – a claim is then made by the person insured against such risks to the insurance company. A claim, then, is basically a request made by the insured for payment of the benefits as provided by the policy.
Every claim submitted by the insured will be given a unique identifying number allocated to it for reference purposes.
This is an arrangement that commonly involves separate insurers sharing the cover of one risk. If you have an insurance policy with 80% Coinsurance and a medical bill of R1000, the insurance will pay 80%, or R800 and your share of the cost will be the other 20% or R200 (assuming there is no deductible or Co-pay plan.)
This is the ultimate car insurance product. Comprehensive car insurance covers your vehicle in the event of almost any form of damage or theft.
This insurance terms is referred to as Household Contents Insurance. This kind of policy covers the contents of your home or building, whether it be furniture, appliances or other valuables.
Co-pay is the amount of money you must pay out of your pocket before the insurance company will begin to pay for your tangible expenses. Typically, this is required instead of a deductible or coinsurance and requires you to pay a set fee for specific visits.
This is the range of protection provided under an insurance policy. For instance, a third party, fire and theft policy will cover the damages inflicted upon the other vehicle involved in a collision, but not the damage to your own. Every insurance policy covers certain incidents, so it’s important to know what the limits of your coverage.