By: Clyde Parsons
DECISIONS on your insurance and risk management begins with a solid grasp of the fundamental terms and definitions in your insurance policy. Without this understanding, you may only uncover specific exclusions or conditions at the claims stage, potentially impacting the outcome adversely.
The task of navigating the terms and conditions of your insurance coverage can be challenging, especially when attempting to compare insurance quotes and conditions across different policies and insurers. Given the marked variations between policies, one of the wisest investments you can make to protect your hard-earned assets is to seek the advice of a professional insurance broker. A broker’s expertise is to compare product benefits, assess technical specifications, evaluate terms of cover, and analyse pricing. They will help you to find an insurance solution tailored to your unique needs and circumstances.
To facilitate a better understanding of your insurance coverage, here is a concise list of common insurance terms and conditions. This guide aims to empower you to make well-informed decisions in your risk-planning journey. Here are a few terms to familiarise yourself with:
Policyholder: This is an individual who owns the insurance policy. Knowing who the policyholder is ensures clarity about coverage and responsibilities.
Premium: This is the periodic payment (mostly monthly) made by the policyholder to the insurance company to maintain cover. Understanding your premium is crucial for budgeting and ensures that clients are continuously covered, right now and into the future.
Beneficiary: The beneficiary is the person or entity nominated to receive the death benefits in a claim. It’s important to keep the beneficiary details up to date, so you can ensure that benefits or payout go to the intended recipient.
Underwriting: Underwriting is how insurers assess and evaluate the risk associated with insuring a particular person. Please ensure that you are honest and thorough during the underwriting process to ensure accurate cover and premiums.
Claim: A claim is a formal request to the insurance company to apply for a payout for an insurable event, such as suffering a serious illness or injury that leaves you unable to work or passing away. Knowing the claims process helps expedite the payment in times of need.
Exclusion: As important as it is to find out what is covered and included in your insurance, finding out what is excluded is just as significant. Exclusions refer to specific conditions or situations not covered by the insurance policy.
Reinstatement: Reinstatement is the process of restoring a lapsed policy to active status after catching up on missed premium payments. Usually, there is a fixed period of time during which a reinstatement can happen, after which you might be asked to apply for a new policy.
Broker: A broker – also known as a financial adviser or intermediary – is a professional who provides advice, compares products and helps find the most suitable insurance solution. They assist you in making informed decisions and getting the best cover for your needs. They also help you to keep your cover up to date and assist with the claims process.
Financial advice plays an important role in helping you understand your cover
The expertise of an experienced broker will significantly enhance your comprehension of the terms and conditions of your insurance coverage. If you don’t have a broker, empower yourself by taking an active role in understanding the terms of your insurance policy. Don’t hesitate to ask questions and conduct your own research. Familiarising yourself with the details of your policy ensures you make informed decisions.
* Clyde Parsons is the chief innovation officer at BrightRock.
PERSONAL FINANCE