Insurance Terms Everyone Should Know

Insurance is an essential part of our lives, providing financial protection against unexpected events and risks. However, understanding the complex terminology used in the insurance industry can be overwhelming. In this piece, we will explore the key insurance terms everyone should know to make informed decisions about their insurance policies.

1. Premium: The premium is the amount you pay to maintain your insurance policy. It is usually paid monthly or annually and is the cost of keeping your policy active.

2. Deductible: The deductible is the amount you must pay out-of-pocket before your insurance policy kicks in. For example, if your deductible is N5,000 and you make a claim for N10,000, you will pay the first N5,000, and your insurer will cover the remaining N5,000.

3. Policyholder: The policyholder is the person or entity that owns the insurance policy. They are responsible for paying premiums and making claims.

4. Insured: The insured is the person or entity that is covered by the insurance policy. They may not always be the policyholder, as in the case of group insurance policies.

5. Claim: A claim is a request to your insurer to cover the cost of damages or losses. You must provide evidence to support your claim, and your insurer will assess it to determine if it is valid.

6. Coverage: Coverage refers to the risks or events that your insurance policy protects you against. For example, a car insurance policy may cover accidents, theft, and vandalism.

7. Limit: The limit is the maximum amount your insurer will pay for a claim. For example, if your policy has a limit of N1 million and you make a claim for N1.2 million, you will only receive N1 million.

8. Exclusion: Exclusions are events or risks that are not covered by your insurance policy. For example, a health insurance policy may exclude pre-existing conditions.

9. Endorsement: An endorsement is a change to your insurance policy that adds or removes coverage. For example, adding a new driver to your car insurance policy.

10. Underwriter: The underwriter is the person or entity that assesses the risk of insuring you and sets the terms of your policy, including the premium and coverage.

11. Broker: A broker is an intermediary between you and your insurer. They help you find the best policy and can assist with claims.

12. Reimbursement: Reimbursement is when your insurer pays you back for a claim you have made.

13. Pre-existing condition: A pre-existing condition is a medical condition that you had before taking out a health insurance policy. Some policies may exclude these conditions or require a waiting period before covering them.

14. Waiting period: A waiting period is the time you must wait before you can make a claim or receive coverage for certain events or conditions.

15. Third-party: A third-party is someone who is not the policyholder or insured but is involved in a claim. For example, if you are in a car accident and the other driver is at fault, they are a third-party.

Conclusion?

Understanding these insurance terms is crucial to making informed decisions about your insurance policies. Remember, insurance is a contract between you and your insurer, and knowing the terms of that contract can save you time, money, and stress in the long run. Always take the time to read and understand your policy documents, and don't hesitate to ask your insurer or broker if you have any questions.

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