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These are 60 Insurance Terms You Need to Know, So You Don’t Fail To Understand

A-Z Insurance Terms You Need To Know, here is a summary of common terms in insurance that important to know and their definitions.

Table of Contents

Overview #

Many terms in the insurance world are not widely known or understood by ordinary people. Even though this is important so that they can understand when buying insurance products and can choose insurance that suits their needs.

For those of you who want to take out insurance or plan to buy insurance. Understanding insurance terms is something that cannot be underestimated.

Generally, a number of terms in insurance use English, but some use loanwords. All terms in the insurance can be found in the handbook provided by the insurance provider/company to policyholders.

But you don’t need to worry about this first. For those of you who don’t know much or don’t have enough time to study policies, here is a summary from InsuranceWhat.com about common terms in insurance that are important to know and their definitions.

Insurance Terms You Need to Know
Insurance Terms Illustration

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A-Z Insurance Terms You Need To Know

TermsDefinitions
AgentInsurance company employees who are tasked with marketing products or serving prospective customers, starting from submitting the policy provisions to the contents of the policy agreement after becoming a policyholder.
ActuarialScience in insurance that applies mathematical, financial, and statistical methods to estimate or calculate risk.
HeirThe name of the person listed in the insurance policy as the party receiving compensation in the event of death to the Insured.
AdjudicationThe dispute settlement stage is to make a decision whether the claim submitted by the policyholder must be accepted or rejected by the insurance company.
AnnuityPayments made by the insurance company periodically for a certain time.
AssignmentThe term used to describe a transfer in insurance.
AssignorThe party who assigns insurance rights and benefits from policyholders to other people.
Automatic Premium Loan (APL)Provision for automatic cash value withdrawal from the policy if the customer has not paid the premium until the grace period ends.
BancassuranceInsurance products offered and sold through banks and the target audience are bank customers.
Cut LimitCosts that must be incurred by policyholders to cover the shortage of costs paid by the insurance company to the hospital.
Acquisition FeeCosts incurred when issuing the policy.
Top-Up FeeCosts incurred when paying periodic premiums and single premiums.
Cash ValueTotal money was given by the insurance company to policyholders (cash value).
Contestable PeriodTime is given to the insurer to cancel the policy.
Premium leaveA feature in insurance that customers can use if they want to stop paying premiums temporarily.
Investment FundThe amount of funds obtained from the premium payment has been deducted by the acquisition cost and several other costs.
Endowment PlanInsurance program with two benefits: protection and savings.
Explanation Of Benefits (EOB)A letter from the insurance company as a sign of acceptance of a claim given to the policyholder.
Underwriting FieldThe initial selection by the insurance company.
Flat RateThe monthly premium fee determined by the insurance company is the same nominal for each pay period during the contract period.
Free-Look PeriodPolicyholders get 14 days to decide on cooperation / cancel the policy because they do not agree with the terms and conditions in the policy.
Grace PeriodThe term used to describe the grace period given to policyholders for 30 days from the due date of payment.
Unit priceThe results obtained from the investment portfolio are obtained from the value of assets plus the profits obtained from the investment returns.
Policy IllustrationProjections of insurance benefits received by policyholders.
Investment-linked PlanA term that refers to unit-linked insurance that offers protection and investment benefits.
Protection GuaranteeOne of the guarantees provided by the insurance company is that policyholders can buy additional insurance products without the need for a selection process.
Guarantee / Warranty StatementA statement issued by a potential customer regarding the condition of the person or thing insured.
Joint life annuityPayments made will stop when the insured party dies.
Key Employee (Key Person)Experts owned by insurance companies with all the abilities that support the success of the insurance company.
ClaimThe demands are given by the insurance policyholder to get the right properly so that the insurer pays the conditions according to the existing procedure.
End of Contract ClaimsThe policy holder’s claim because the contract has ended with the insurance company.
Pending ClaimsClaims made by policyholders and not being able to be paid by the insurance company for some reason.
ClauseThe articles contained in the policy agreement that policyholders and insurance companies must comply with.
LapsePremiums that are not paid beyond the grace period can invalidate the policy (the effective period of the policy stops).
Life Insurance CompanyAn insurance company that has an insurance product to accept the transfer of life-related risks (economic value and the insured).
Loan of PolicyIf the policyholder asks for a loan from the insurance company in a certain amount and is agreed with the cash value guarantee of the policy.
Late Remittance OfferThe final offer from the insurance company is used to recover canceled customer policies.
Law of The Large NumbersCalculation through statistical data through the concept of the law of large numbers can describe the percentage of all possibilities that may occur to policyholders.
Main ReservePremium reserves owned by policyholders will be calculated in the middle of the year.
Mail KitSales brochures are used to send various information related to insurance programs that are sent by mail to prospective customers to make it easier to make decisions about joining the insurance program.
Grace periodThe deadline was given by the insurance company to the policyholder to pay the agreed premium.
Waiting PeriodThe period when there is no premium payment due to certain reasons.
MinorPolicyholders who are under 21 years of age.
MortalityThe timing of the estimates of death is uncertain or can also be used to indicate the frequency of deaths.
Net Asset Value (NAV)The basic value of an investment in a Unit Link policy.
Investment ValueThe total value of units formed in a period.
Occupational Risk / HazardThe risk from the policyholder’s job.
PayorThe term used for the policyholder as the party who pays the premium.
Policy HolderThe person who bound by an agreement made with the insurance company and is responsible for all obligations to the insurance company.
PolicyAn agreement made by the policyholder with an insurance company.
Insurance policyAn agreement between the policyholder and the insurance company to perform the obligations as agreed by both parties.
PremiumThe nominal payment approved by policyholders and insurance companies. Premium payment will be made according to the agreement, it can be monthly, yearly, or according to the agreement.
Premium NoticeA notification letter from the Insurer to the Policyholder that a number of premiums will be due soon.
Quarterly PremiumPremium payments are made once every three months.
Regular Premium PolicyA policy requiring regular premium payments, such as monthly, every six months or annually.
ReinsuranceThe efforts made by insurance companies to protect themselves by delegating insurance risks to other insurance companies.
Rider (Additional Benefit)Additional products from insurance to increase coverage of the main benefit or additional insurance protection at a lower cost.
RiskVarious bad possibilities could happen to someone.
Risk-Based Capital (RBC)Ratio to measure the health and financial security of insurance companies based on their capital ability to cover all existing losses.
Secondary BenefitsOther benefits that are obtained outside of the main benefits.
Single-Premium PolicyA policy with a one-time premium or a policy that only requires one premium payment to be made in advance.
Sum AssuredAmount of Sum Insured or Amount of security deposit insured to policyholders.
SurrenderThe sale of the policy to the Insurer is equal to the Cash Value that has been formed at the time the policy sale is made.
The insuredA person whose life/health is covered in accordance with an insurance agreement or contract.
Sum insuredThe amount of money that must be paid by the insurance company in the event of a claim from the policyholder for the risks guaranteed in the insurance program.
UnderwriterA person who has expertise in assessing or reviewing the various risks of a policyholder to determine whether a prospective customer is entitled to receive insurance or not.
Underwriting (Guarantee)The process of assessment/valuation and classifying the degree of risk associated with the prospective Insured, as well as making a decision to accept or reject the risk.
TermsDefenition
Table 1: Insurance Terms You Need to Know

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The Conclusion #

Know the Definitions so that you don’t get them wrong

Hopefully, the explanation of the insurance terms above can help you understand insurance. Don’t forget to protect yourself, your family, and your belongings with insurance before it’s too late.

Of course, choosing the right insurance according to your needs and budget is important. Now you can buy life insurance, health insurance, vehicle insurance to Covid-19 insurance online too here.

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By Matt Adam

Administrator and Author

Matt Adam is the founder and administrator of InsuranceWhat.com, the insurance best resources site. Learn more about him here and connect with him on the...

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