Insurance can feel confusing when you come across words, in a policy document.. Once you know the basic terms reading an insurance policy becomes much simpler.
Here are 10 important insurance terms every beginner should understand.
1. Policy
A policy is the insurance contract that shows what is covered what the conditions are what is not covered and what each side must do.
2. Policyholder
The policyholder is the person or organization that owns the insurance policy.
3. Insured
The insured is the person, item or risk that the insurance policy protects, depending on the type of insurance.
4. Premium
A premium is the amount the policyholder pays to get insurance coverage.
5. Sum Insured
The sum insured is the amount the insurance will pay under certain policies as long as the conditions are met.
6. Claim
A claim is a request made to the insurance company for money or benefits under the policy.
7. Nominee
A nominee is someone chosen by the policyholder to receive the policy’s benefits according to the rules.
8. Deductible
A deductible is the amount the policyholder must pay out of pocket before the insurer pays anything, based on the policy.
9. Exclusion
An exclusion is something that the insurance does not cover.
Knowing exclusions is very important because they show what protection you will not have.
10. Waiting Period
A waiting period is a set time when some coverage or benefitsre not available.
Waiting periods matter a lot when buying health insurance.
Why Should You Learn These Terms?
Insurance documents often have rules. Knowing these terms helps you understand what you are paying for and what you can expect from your policy.
It also makes it easier to compare insurance options.
Final Takeaway
You don’t need to be an expert to read an insurance policy. Start with these terms go through the policy carefully and ask questions if anything is not clear.
