|
Accidental Damage (Home)
Insurance that covers your personal possessions and to
an extent your property against accidental damage. Most
insurance providers either repair or replace possessions
when a claim is made.
Accidental Death Benefit (Life)
This normally refers to a cash lump sum paid to the
beneficiaries of a life insurance policy when the policy
owner dies due to accident. Not all life insurance
policies include accidental death.
Annual Policy
An insurance policy e.g. auto, health or home, that is
renewed or updated on an annual basis. This type of
policy offers the insured the opportunity to choose a
different provider without incurring penalties.
Beneficiary
The named person or persons who benefit from the pay-out
of an insurance policy. For example, the main
beneficiary of a life insurance policy is normally the
spouse or another family member of the deceased, whereas
the beneficiary of a health insurance policy is the
person named on the policy.
Benefit Period (Health)
The benefit period of a health insurance policy refers
to the number of days on which benefits are claimed by
the person named on the policy or one of their
dependants. Most policies run from 1st Jan through to
31st December with regards to benefit days.
Claim
A claim on an insurance policy occurs when the insured,
or the beneficiaries of the policy in the case of life
insurance, ask for the benefits named in the policy to
be paid. So for example making a claim on a health
insurance policy will result in medical bills or other
related expenses being paid.
Co-insurance (Home)
The requirement of a policy holder to arrange property
insurance that is equal to a specified percentage of the
value of the property. If adequate property insurance
isn’t held there is a risk of non-payment on some losses
when they are claimed for.
Collision Insurance (Auto)
Part of an auto insurance policy that covers physical
damage to the insured car that occurs as a result of a
collision with an inanimate object. This section of a
policy is automatically included in comprehensive cover.
Comprehensive (Auto)
A type of auto insurance policy that pays to repair any
physical damage to the insured car or to replace it if
stolen. Physical damage in this case refers to collision
damage and other types of damage not associated with
collision e.g. cracked windscreen, fire damage or
vandalism.
Convertible (Life)
Describes a term life insurance policy that can be
converted into a whole life policy without the need for
medical tests and physical examinations. A whole life
policy can’t be denied in these circumstances.
Co-payment (Health)
A fixed fee that an insured individual is required to
pay towards the cost of health services, in addition to
the amount paid by their insurance policy. For example,
some physicians stipulate a co-payment of $10 each time
an appointment is attended.
Coverage
A list of eventualities that are included as part of an
insurance policy. For example, a health insurance policy
will list all medical procedures, illnesses and injuries
that are covered and can be claimed for. Similarly a
life insurance policy will list both life and death
benefits.
Deductible
The fixed amount that an insurance policy holder has to
pay before the benefits of an insurance policy become
viable e.g. an auto insurance policy might have a
deductible of $200 and so the insured will have to pay
the first $200 of any claim.
Elimination Period
Also known as the waiting period, this is the amount of
time a policy holder has to wait between filing an
insurance claim and actually collecting the benefits.
Excess
The size of the claimable benefits above the minimum
amount of coverage noted on the insurance policy. For
example, the minimum or primary coverage of a health
insurance policy may be $100,000 however the excess will
allow benefits to be paid up to $1million.
Exclusion
Anything not specifically covered by an insurance
policy. Most policies will clearly state any exclusions
that apply.
Face Amount (Life)
The maximum amount of money that a life insurance policy
will pay out at the time of death or at maturity.
Grace Period
The amount of time that an insurance policy remains
valid after a payment is missed. The grace period on
most insurance policies is 31 days and a payment made
during this period is considered to be on time. Anything
after 31 days and the insurance policy can legally be
cancelled by the insurance provider.
Guaranteed Issue Right (Health)
The right of an individual to purchase health or life
insurance without undergoing a physical exam.
Indemnity (Home)
A payment of compensation for a loss. The payment can be
made in the form of a monetary payment, the repair of a
damaged item or the replacement of an item lost, stolen
or beyond repair.
Insurance Broker
A financial expert who acts as an intermediary between
the insured and the insurer. Brokers often have access
to insurance products on the market that the general
public know little about and can therefore ensure the
best policy for the lowest premiums.
Living Benefits (Life)
Also known as accelerated death benefits, these are
benefits that allow you to claim on your life insurance
policy whilst still living. A policy with living
benefits can help to pay for long term care, nursing
care and to live life to the full if diagnosed with a
terminal illness.
Mortgage Insurance (Health)
An addition to a health insurance policy that covers any
outstanding mortgage should the policy holder be unable
to work in the long term.
Non-standard Auto (Auto)
A type of auto insurance policy specifically designed
for high-risk drivers and those who have previously been
refused insurance. These policies have notoriously high
premiums.
Out-of-pocket Limit
The maximum amount of money that an insured individual
is required to pay before the benefits of a health
insurance policy take over.
Package Policy
The combination of two or more forms of insurance into a
single all-encompassing policy. For example a home owner
policy is a combination of property insurance,
accidental damage insurance and liability insurance.
Premium
The amount payable by the insured to guarantee the
benefits of an insurance policy. Most insurance policies
accept monthly premium payments however some will
specify a single annual payment due at the beginning of
the policy terms.
Quotation
A close estimate of the premium that will be payable for
a specific insurance policy.
Risk class (Auto and Health)
A measure of how likely an insured person is to claim on
an insurance policy. For example a young female who
doesn’t smoke would probably be classed as ‘preferred’
whereas a 60 year old male who has smoked throughout
their adult life would be classed as ‘standard’ or
‘substandard’ by an insurance underwriter.
Standard Auto (Auto)
Auto insurance policies designed for competent, low risk
drivers who have had none or very few insurance claims.
Surrender Charge (Life)
A fixed fee charged to holders of life insurance
policies when they make the decision to cash in their
policy or annuity.
Term
The length of time an insurance policy runs for. For
example home and auto insurance policies generally run
for one year before being renewed whereas health
insurance policies can run for upwards of 10 years.
Term Life Insurance
A life insurance policy that runs for a specific length
of time before terminating. Most term policies run for
the same length of time as the insured individual’s
mortgage so that in the event of their death any
outstanding mortgage will be paid from the insurance
benefits. It is often possible to convert a term life
insurance policy into a whole life policy instead of
terminating it altogether.
Underwriter
A highly trained individual whose job it is to assess
risks associated with an individual in order to
determine the premiums and coverage limits of their
insurance policy.
Waiver of Premium
A clause that is included in some life insurance
policies that allow the policy to remain valid even
though the premiums cease to be paid by the insured. The
reasons for non-payment are limited to disability and
the inability to work for health reasons though.
Whole Life Insurance
A life insurance policy that continues to run right up
until the insured individual’s death. If this type of
policy is cancelled for any reason it is very rare that
the insured gets any of their premiums refunded.
|
