Insurance Terms Explained in a simplified manner

Annuity   :   Cash Payments made by the Insurance Company to help you meet your living expenses after retirement
Assets   :   Anything that you own and has a cash value
Beneficiary   :   Person who is entitled to receive the benefits specified in the Insurance Policy
Broker   :   The go-between you and the Insurance Company to represent your needs and interests.
Calamity   :   A mishap resulting in unexpected heavy loss
Cashless Settlement   :   This is a service in Health and Motor insurances, Insurance Company will directly pay to the hospital or garage up to your coverage limit.
Claim   :   Money you can get from your Insurance Company for the losses you suffered.
Claim settlement   :   Process of settling the Claims from Intimation to payment
Claim Settlement Ratio   :   The proportion of settled claims to intimated ones
Constructive Total Loss   :   Cost of repair of the damaged asset is more than its replacement value
Co-pay   :   Your share of the claim, you agreed to pay from your pocket
Cover/Coverage   :   Maximum amount payable in the event of loss. Same as Sum Assured or Sum Insured.
Death Claim   :   Insurance money payable only in case of death of the Insured
Deductible   :   The amount Insurance Company deducts from the Claim amount payable in case of loss
Depreciation   :   Decrease in cash value of the property due to wear and tear or age
Discount   :   Amount reduced from the estimated Premium payable on your Policy
Domiciliary Hospitalization   :   Treatment carried at home for any reason which otherwise requires hospitalization
Empaneled Hospital /Networked Hospital   :   Hospitals where cashless settlement is available
Equity   :   A part of share capital of a Company
Exit charges   :   Charges you incur if you like to take out the policy amount before its due date
Frequency   :   The number of times, you pay your premium instalments in a year
Guarantee   :   Money the insurance company assures to pay on certain events of death, surrender, withdrawal or maturity of Policy
Hazard   :   Danger that might lead to a financial loss
Hidden charges   :   Charges that you have not realized you need to pay as they are concealed in small print or in a language difficult to understand
IDV / Insured Declared Value   :   The amount you insure your vehicle for. It usually decreases every year due to depreciation.
Inflation   :   General increase in prices or decrease of value of money
Insurance   :   Financial security to pay you in the event of loss to property, health or life.
Insured   :   The person whose life, health or property is insured
Insurer   :   The Company which provides the Insurance
Investment   :   Money put into any other financial assets that gives you a return or gain.
IRDAI   :   The Regulatory Agency responsible for protection of your rights under the Insurance Policy
Lapse   :   When your insurance terminates due to non payment of premium in time.
Liability   :   Any financial burden you have that needs payment of cash
Liquidity   :   Money that you can readily spend
Livestock   :   Farm animals that help you get revenue
Lock in period   :   Time period when you cannot take money out from your policy except in case of a claim.
Long term Investments   :   Investments made usually for above 5 years.
Loss   :   Unexpected damage to property, health or property that causes financial distress
Market value   :   Money you get if you sell the assets in the market
Material Fact   :   Important information about you, Insurance Company needs to decide on your Policy acceptance, premium and terms. If you hide any material facts, your claims may be rejected later.
Maturity Benefits   :   Amount you’d get at the end of the Policy period
Maturity Claim   :   Claim for Maturity benefit (the amount you’d get at the end of the Policy Period)
Mortality Charge   :   Its part of your premium, Insurance companies would charge for covering risk of death of the Insured.
Mortality Rate   :   The number of deaths in a particular segment at a particular time
Mutilation   :   Serious damage to a body part leading to dysfunction of the same.
Net Asset Value   :   It’s the value of your unit holdings in an Insurance Policy determined by dividing the Market Value of the investments by the number of units in the fund invested.
Network Providers   :   Network of hospitals or garages where you can get Cashless Service in Health or motor insurance respectively
No Claim Bonus   :   The discount you’d get on your next year’s premium if you don’t have any Claims before
Nominee   :   The person specified to receive the Insurance amount in case of a Claim
Octroy Charges   :   State or Local Government taxes payable on goods at the entry point of a City/State
Optional Deductible   :   Money that you agree to be deducted from your insurance claim to get discount on future premiums
Partial insurance   :   In Partial Insurance, your premium would get reduced because part of the risk is on you and in case of claim, only partial amount is paid
Partial loss   :   An asset that’s not completely damaged but is also not fully useful
Partial withdrawal   :   Money that you can withdraw from your Policy benefits after some years
Peril   :   The cause of an injury or accident that leads to financial loss
Policy   :   Also called Plan. This is the key document that lists out the features, benefits, terms and conditions of Insurance.
Policyholder   :   A person or entity who is the owner of an Insurance Policy
Preauthorization   :   Written permission from insurance company for cashless claims before getting hospitalized. Usually, 4 days before for pre-planned or within 24 hours of urgent hospitalization
Pre-Existing Condition (PED)   :   Any health problem you are suffering from before taking the insurance.Claims caused due to PEDs are not payable during a wait period of 2-4 years from taking Insurance
Premium   :   The amount you need to pay to get an Insurance Policy and enjoy its benefits.
Premium waiver   :   A condition where further Premium need not be paid after an event such as the death of a parent of an Insured Child, though Policy benefits continue till the full term of the Policy.
Profit   :   Gains you make from your financial investment
Property   :   Assets with a commercial value that you own
Pro-rated basis   :   Amount charged or paid proportionately over a particular time period.
Reimbursement Health Claim   :   Where you don’t have cashless facility, you need to first pay to hospital and claim later from your Insurance company.
Reinstatement value   :   It is the amount that’s needed to bring back your damaged property to its condition before the accident.
Renewal   :   It’s a process to continue with the Policy for which you need to pay premiums every year
Returns   :   Gains you get from your investment
Rider   :   An additional benefit that can be added to your Policy for an extra cost
Risk   :   Danger that might lead to financial loss
Risk profile   :   It’s an estimated view of how much risk you can take without seriously impacting your financial condition
Room Rent Limit   :   Maximum amount, your Insurance Company would pay for a hospital room in case of a health claim.
Savings   :   Money you keep aside for future needs
Sum Insured   :   Maximum amount payable in the event of loss. Same as Cover/Coverage.
Super Top up   :   Extra amount, a Plan will pay for your hospital bills after you have used the full insurance cover on any single hospital bill.
Surrender value   :   Money that is paid to you if you exit the policy before its full term
Surrender   :   Cancelling the Policy before its full term
TAT (Turn Around Time)   :   Time taken by Insurance Company to issue your policy, pay claims or any service request.
Term   :   Duration or time period of an Insurance policy
Third party   :   Anyone other than the Policyholder or the Insurance company
Top-up   :   Extra amount, a Plan will pay for your hospital bills after you have crossed the full insurance cover on your annual hospital bills.
TPA   :   The Third Party Administrator who helps you process all your Insurance claims by coordinating with Hospitals and Insurance Companies.
Underwriting   :   The process of assessing the insurability of a risk for specified premium, terms and conditions.
Units   :   A numerical part of your holdings in your Insurance Policy. If you multiply your Units with NAV,you’d get the present value of your Insurance holdings.
Valued Policy   :   A Policy where a pre-determined amount is paid irrespective of the extent of loss or the actual value of the property that’s damaged.
Wear and Tear   :   Decrease in the value of an asset due to its usage or age. Wear and Tear losses are considered normal and not paid by Insurance.
Zero Depreciation   :   It’s an Add-on benefit that helps you get full Property value without considering the depreciation of the asset.

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