Important Insurance Terms
When you’re shopping for insurance, you might not understand some of the terms used. That can make it hard to understand the free insurance quotes you receive. To help you in your search for affordable insurance, here are some of the most important insurance terms and their definitions. Once you understand some of the lingo and jargon used in the insurance industry, shopping for insurance will be much easier.
Actual cash value - this is a type of insurance that pays damages based on the replacement value minus depreciation. Typically, the older the item, the lower the amount you will be compensated.
Adjuster, this is the person who evaluates losses and decides how much your claim should be settled for.
Agent, there are two types of insurance agents who can provide you with free insurance quotes. Independent agents are self-employed and may represent several insurance companies. These agents are paid based on commission. Exclusive agents work only for one insurance company and may be paid salary or commission.
Annuity, is a type of life insurance product that pays income benefits for a certain amount of time. In a deferred annuity, the asset grows tax-deferred over a period of time before being paid to the recipient. Immediate annuities can be paid within a year.
Beneficiary, the person who has been name to receive the benefit of the policy.
Claim, a request form the insured or the beneficiary to receive benefits from the insurance policy.
Claimant, the person who makes the insurance claim.
COBRA, the Consolidated Omnibus Budget Reconciliation Act is a federal law that allows employees to continue receiving coverage under an employer’s group health plan for up to 18 months after leaving the company.
Coverage, the range of protection you’re provided under the insurance policy.
Deductible, the amount you’re required to pay before the insurance begins to pay.
Exclusion, things that are not covered under the policy.
Grace period, the amount of time between the payment due date and when the policy will be cancelled if payment is not received. Your policy will be cancelled if not paid during the grace period.
Liability insurance, a type of insurance that pays on your behalf when a loss is your responsibility.
Noncancellable, these are terms of the contract that cannot be changed. Some costs may be noncancellable.
Out-of-pocket limit, this is the maximum amount of money you must pay before the insurance will pay for all of your expenses. The out-of-pocket limit typically applies to health insurance.
Policy, the contract that makes insurance effective.
Premium, the cost of insurance for a specific period of time.
Underwriting, the process of qualifying insurance applicants based on their degree of insurability. Underwriting is used to assign a rate to your insurance. It’s also used to deny coverage to applicants that do not qualify.
March 06, 2009, Posted by Rainy Day Mitch