Insurance terminologies, to some extent, can be very difficult to understand.
But the importance of you understanding them cannot be overemphasized. And this is because the understanding of insurance terminologies gives to you a certain kind of awareness that helps you choose the right insurance plan for you.
Owing to this, a list and definitions of insurance terminologies have been compiled to help bring understanding to you in the puzzling world of Insurance. But first, there are roads we must journey through in other to get to our desired destination.
What is insurance?
Insurance can simply be defined as a form of risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation known as the premium.
Insurance makes it possible for individuals, businesses and other entities to protect themselves against significant losses and financial hardship at a reasonably affordable rate. We say "significant" because if the potential loss is small, then it is illogical to pay a premium to protect against the loss.
When is insurance necessary?
Whenever you want to protect against any monetary loss, think insurance.
Insurance is very, very important. This is because it is a sure way of protecting oneself or someone else against future financial hardship.
List and Definitions of Insurance Terminologies
1. Annuity Plans: This Insurance plan offers a pension to be paid to the policyholder or his wife. However, should it happen that the cases death occurs for the both of them, then a lump sum of amount is paid to the next of kin.
2. Age Limit: This is the minimum or maximum ages below or above which Insurance policies application or renewal will not be considered.
3. Assignment: This is a method of giving another person (a lender) the authority to become the sole beneficiary of a death benefit to use as a collateral for a loan. If however the Insurance policyholder i.e the borrower is unable to pay as a result of one or two incapabilities, the lender can cash in the insurance policy of the borrower as a result of the vested authority.
4. Beneficiary: Whosoever is entitled to receive distributions from a trust, will or life insurance is known as a beneficiary.
5. Coverage: Any of the numerous risks covered by an Insurance policy, or range of protection given under a contract of insurance.
6. Day of Grace: These words are familiar words. They are used on a daily basis. But in insurance, it simply implies the provision of few more days given in most loans and insurance policies to the policyholder after the the date to make payment is overdue. In these days, there are no extra charges or late fee.
7. Death Benefit: This is the amount of benefit in a life insurance policy; paid to a beneficiary upon event of death with concern to the insured person.
8. Endowment Policy: This policy is an insurance agreement which offers the payment of a lump sum of money after successful completion of given terms: on its maturity or death of the policyholder.
9. Exclusion: Not in all situations Insurance policies provides benefits. Those situation or conditions which policies will not be provided, is known as exclusion.
10. Lapsed Policy: An Insurance policy is considered a lapsed policy when as a result of non payment of due premium, the policy expires and it is no longer in force.
11. Maturity: This is the date upon which the promise face amount of an Insurance policy is paid to the policyholder.
12. Maturity Claim: A maturity claim is the paid payment of an agreed amount to the policyholder at the end of a contract
13. Moral Hazard: There are some certain factors that affect the decisions of the insurance company with regard to accepting the risk. These factors are known as moral hazard. Examples of moral hazards are: state of health, income of insured person and personal habits.
14. Nomination: This is the act whereby the insurance policyholder authorizes another person to receive the policy money.
15. Premium: This is the regular payment of an amount to be paid by the policyholder for a contract of insurance in exchange for the coverage
List and definition of health insurance terminologies
1. Claim: This an application from the insurance company with regards to benefit in paying for services for a health care professional.
2. Co-Insurance: This is the balance percentage an individual is required to pay for health care service after the payed percentage of the insurance company.
3. Denial Claim: This is when an insurance company disregard the request to pay for health care service.
4. Exclusion or limitation: This can be defined as any specific situation, condition, or treatment that a health insurance plan does not cover.
5. Group health insurance: This is a coverage plan provided by an employer or an organization that covers the individuals in that group and their dependents under a single policy.
6. In-network provider: This can be explained as a health care professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. You will generally pay less for services received from in-network providers because they have negotiated a discount for their services in exchange for the insurance company sending more patients their way.
7. Individual health insurance: This is the opposite of group health insurance. It is a health insurance plans purchased by individuals to cover themselves and their families.
8. Pre-existing condition: This can simply be defined as a health problem for which you have been treated, or has been diagnose before buying a health insurance plan.
9. Rider: This is simply the coverage options that enable you to expand your basic insurance plan for an additional premium. A common example is maternity rider.
10. Underwriting: This is the process by which health insurance companies determine whether to extend coverage to an applicant or to set the policy's premium.
In summary, the reminder of our inability to overemphasize the knowledge of insurance terminology must be restated. This is because, knowing that insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty is not enough. One should ensure to know the terminologies that concerns the activities of insurance; because as earlier said, the awareness of the terms, helps in choosing the right insurance plan.