Essential Insurance Jargon Explained - Your Comprehensive Terminology Guide
Covering your bases with insurance is essential, whether it's life, health, or liability - but understanding the nuances and terminology used in policies is crucial. To gain a better understanding of your insurance documents, we'll walk you through some common insurance terms, focusing on health and term insurance.
Term Insurance Terms
A
Accidental death benefit:
An additional rider (extra benefit) you can add to your term insurance policy. If you were to die from an accident during the policy term, your loved ones will receive an additional sum of money from the insurance company, aside from the amount stipulated in the term policy.
B
Beneficiary:
The fortunate individuals chosen by you, usually family members such as your spouse, children, or parents, who will receive the term insurance benefits if you pass away during the policy term.
Benefits:
The lump sum amount the insurance company will pay out to your loved ones if you were to pass away during the term of your policy.
C
Coverage:
A general term for the total amount of the term insurance you've purchased. The insurance company pays out this entire amount to your loved ones in the case of your death during the policy term.
Claimant:
The designated family members named in your term insurance policy, who can claim the term insurance benefits if you were to pass away during the policy term.
D
Death Benefit:
The entire sum paid out by the insurance company in case you pass away during the term of your term insurance policy.
Death Claim:
A claim submitted by the nominee, or designated family member, named in your term insurance policy, in case you pass away during the policy term.
G
Grace Period:
An extended period following the due date, allowing you to still pay the premium for your term insurance to keep your policy active.
I
Insurance is a subject matter of solicitation:
This phrase means that insurance must be explicitly requested or inquired about, as per IRDA (Insurance Regulatory and Development Authority) requirements and can be found in all insurance advertisements.
Health Insurance Terms
B
Benefits:
The total amount the insurance company will pay for medical expenses incurred by you or your family members, insured under the health insurance policy.
C
Coverage:
The specific types and values of medical expenses that the insurance company will pay for medical expenses incurred by you or your family members, insured under the health insurance policy.
Co-payment:
The portion of the medical bill that the insurer covers, typically when dealing with pre-existing conditions or low waiting periods for certain ailments. The insured party will pay the remaining part of the medical bill.
D
Daycare treatment:
Certain treatments, such as chemotherapy, tonsils, and dialysis, can be completed in less than 24 hours. Despite the general requirement of staying in the hospital for at least 24 hours to claim medical insurance coverage, daycare treatments are usually covered under the health insurance policy.
Domiciliary hospitalisation:
A situation where a patient receives treatment at home, but the treatment is considered hospitalisation as prescribed by the doctor. For example, if a hospital lacks beds or the patient is too fragile to move to a hospital, domiciliary hospitalisation may apply.
E
Exclusions:
A list of medical conditions, external factors, or healthcare expenses that are not covered under the health insurance policy. The policyholder must cover these expenses independently.
F
Family floater health insurance:
A type of health insurance where multiple family members are covered under the same policy. This allows for claims to be made for multiple family members' medical expenses each year within the limits of the policy.
G
Group health insurance:
Insurance provided by an employer or professional association for its employees or members.
Grace period:
An extended period following the due date, allowing you to still pay the premium for your health insurance policy to keep it active.
Insurance and General Terms
I
Insurance is a subject matter of solicitation:
Insurance must be explicitly requested or inquired about, as per IRDA requirements and found in all insurance advertisements.
Insured:
The person or people named in the insurance policy, who are entitled to benefits in case they fall ill and require hospitalisation.
M
Miscellaneous expenses:
Expenses related to hospitalisation, such as X-rays, laboratory fees, admission fees, and so on, not covered by the health insurance policy, which the policyholder will have to pay out of pocket.
N
No claim bonus:
A bonus given by insurance companies to encourage a claim-free year,; increasing the coverage sum insured at the same premium level.
P
Policyholder:
The person who has purchased the insurance policy.
Policy Tenure:
The duration for which the insurance policy has been purchased.
Premium:
The amount paid for the insurance policy, usually monthly or yearly.
R
Restoration:
If the entire sum insured is consumed during hospitalisation/treatment, the insurer will add additional coverage without charging additional premiums, under certain conditions.
Rider:
An additional benefit added to an insurance policy, such as a critical illness rider in a health insurance policy or accidental death benefit rider in a term life insurance policy.
S
Sub-limit:
A cap on the maximum amount a policyholder can claim for a specific expense or procedure.
W
Waiting period:
A waiting period of one to four years may apply to certain health conditions, meaning no claims can be made during this period.
Bottom Line
The multitude of technical jargon found in insurance paperwork can make deciphering a policy challenging. However, if you take the time to read your insurance policy using this glossary for reference, understanding the policy wording will be far less daunting than you think. Keep this handy guide close at hand and breeze through your insurance documents with confidence!
- When considering term insurance, understanding the finances involved and the business aspects, such as coverage, benefits, and claimants, is vital for making an informed decision.
- Health insurance also requires a grasp of its financial and business nuances, including coverage, benefits, and exclusions, to ensure one receives the appropriate insurance for their health needs.
