Frequently Used Terms in Insurance

There are a few and frequently used terms insurance business. Some are technical and others are general. Those are well known but while using those terms we will get confused. Now we will see the terms definitions relating to insurance.

  • Agent: The agent sells and services the insurance products. Agents are two types.
    • Independent agent: An agent who sells and services for more than one company’s insurance products is called independent agent. He will get commission and percentage of each premium.
    • Direct or career agent: Direct agents sell one company products, and get commission and percentage premiums.
  • Broker: A broker is an insurance sales person who searches the market on the basis of customers’ interests but not on the basis of companies.
  • Burglary and theft insurance: Insurance for the loss of property due to robbery or burglary or larceny.
  • Cash value: The total savings amount of a life insurance policy.
  • Claim: Claim is the demand by the beneficiary for payments of the benefits from the insurer.
  • Endorsement or rider: The policy’s terms or coverage or conditions are attached to insurance policy in a written form.
  • Grace period: Grace period is a certain number of days allowed beyond the due date for paying premium. The number of days thus allowed is usually 30 days. When the policyholder pays within the grace period it is considered payment on time.
  • Inflation protection: Inflation protection is a rule by which the size of your insurance cover increases. Inflation protection is useful during inflation because inflation decreases the value of money. Some insurers offer optional property coverage endorsement which increases the limits of insurance policy as per inflation basis.
  • Limits: Maximum amount paid by the company to cover the loss.
  • Liquidity: Ability and speed of conversion into cash.
  • Maturity date: The date which the insurer pays the face amount in an endowment policy to the policyholder. Also the date of annuities paying started by the company to the policyholder.
  • Notice of loss: A written notice needs to be given to the insurance company immediately after the occurrence of loss or accident to the insured property.
  • Ordinary life insurance: An insurance policy that is in force until the policyholder’s lifetime.
  • Point of service plan: A health insurance policy that gives the options to select in-network and out-network to a policyholder when medical treatment needed.
  • Policy: A written agreement between policyholder and the insurer the coverage of policy.
  • Premium: The policyholder have to pay a sum of amount to the company on periodical basis as per the accepted insurance policy.
  • Proof of loss: Documents that are shown as the proof of occurrence of loss.
  • Risk: The chance for occurrence of loss.

While purchasing, doing research, you find these terminology useful.