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Updated 06 June 2013

Insurance terms and definitions

Insurance terms and definitions

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Policy:
 

The printed document that states the terms and conditions of the insurance contract.
Premium: The money a policyholder pays to the insurance company to activate an insurance policy and keep it in force.
Benefits: The amount of money that the insurance company pays to the policyholder or to his/her beneficiary.
Beneficiary: The person who receives the insurance money when an insured event occurs.
Claim: A request for payment for a loss that is covered by the policy.
Exclusions: Specific conditions or circumstances listed in the policy that are not covered and for which the policy will not pay any benefits
Eligibility: The criteria that determine who can purchase an insurance policy (e.g. age limits on who can buy an insurance policy; often one must at least 18years old).

Deductible:
 

The amount of money that a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss. Insurers use this mechanism to share risk with policyholders and reduce false claims.

Waiting Period:
 

The time a policyholder must wait before his or her coverage becomes effective. For example, life insurance policies typically have a delay between the time when policyholders begin paying premiums and when the coverage is active, reducing the risk that someone who is about to die will purchase a policy.


(Gregg Sneddon , Health24, March 2011)

For more definitions, see the excellent jargon-buster page provided by the Association for Savings and Investments in SA (Asisa)

 
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