Posted on July, 2019 by Author
Insurance is a serious subject for all. When it comes to buying an insurance policy, you want to ensure that you understand the basic terminology or you won’t realize what you would be agreeing to! Get yourself a plan that fits you well by learning some basic terms and jargons. Let’s start with the basics – the definition.
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Knowing this terms will help you make the best decision while buying a new policy.
1. Annuity– a contract providing income for a specified period of time, or duration of life for a person or persons. The money you pay/ invest in can be either a lump sum or a number of payments. These contributions generally earn a rate of return, generally tax-deferred.
2. Dividend– a refund of a portion of the premium paid by the insured from the insurers surplus.
3. Hospital Indemnity Coverage– A coverage that provides a pre-determined, fixed benefit or daily indemnity for contingencies based on a stay at a hospital or intensive care facility.
4. Life-Endowment– insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age.
5. Package Policy– two or more distinct policies combined into a single contract.
6. Policy Dividend– a refund of the part of the premium on a participating life insurance policy. The amount of payment is determined by subtracting the actual premium expense from the premium charged. The payment can be taken as cash, applied to a purchase an increment of paid-up insurance, left on deposit with the insurance company or applied to purchase term insurance for one year.
7. Policy Period– time period during which insurance coverage is in effect.
8. Rebate– a refund of part or all of a premium payment.
9. Rider– an amendment to a policy agreement.
10. Term– The period of time for which policy is in effect.
11. Term Insurance– life insurance payable only if death of the insured occurs within a specified time, such as 5 or 10 years, or before a specified age.