When trying to read through contracts and policies for new insurance coverage, sometimes the biggest hindrance to us is often the insurance language being used. The terminology is often complicated which can make the whole experience of buying insurance a lot more challenging for us. As much as we do want to make an educated insurance guess on our own without going for help to the professionals it feels like we’re bound to make a mistake. That is unless we ourselves are experts in the terminology and now you can be with our little useful dictionary!
Premium – The premium is what you will be paying in order to be covered by your insurer, it can be paid monthly or yearly. This is your bottom line.
Deductible – This is the amount you will be responsible to pay from a claim before your policy kicks in. So for example if your claim is for 1000 aed and your deductible is 300 aed. Then you have to pay 300 aed and your insurer will pay the remaining 700 aed. Deductibles vary from policy to policy, some are yearly, some are according to each claim, so make sure you know how much it is and what kind it is.
Beneficiary – And this is basically the person who reaps the rewards of the policy. So for example with life insurance the beneficiary would be the one to receive the money if someone passes away.
Policyholder – This is the person under who’s name the policy is registered. They may be different from the beneficiary.
Warranty – No we don’t mean the warranty on your new TV. In this case warranty is the condition included in your contract which you have to abide by in order for your coverage to remain valid. Some examples of such conditions are keeping your valuables in a safe for home insurance or keeping your car locked for car insurance. Make sure to review your warranties and be diligent in following them.
Coinsurance – Similar to the deductible, the coinsurance is a set percentage that you have to pay of the claim. After your deductible has been applied you may have a coinsurance of 20% which means you have to pay 20% of the claim and your insurer pays 80%.
Copayment – Yes we know the words are all starting to sound the same but copay is a bit different then coinsurance. With the copay clause which is usually related to health insurance, there is a flat fee that you have to pay before visiting a physician, for example, or collecting a prescription.
Exclusion – A little more straightforward, exclusions are everything that isn’t covered by your policy. Something to definitely read and understand thoroughly.
Conditions Precedent to Liability– This term we rarely hear of but it is important because this is everything you have to do before you are eligible to be covered by the insurer. One of the most common is the notification period for claims and another may be making a police report within a specific time frame when you are robbed for example.
Provider/ Service Network – This is basically the network of providers that will be doing the work when you file a claim whether it is the network of physicians, or hospitals, or car garages.
We hope this insurance dictionary helps you in the future when buying your new insurance policy!