Insurance is an essential aspect of our lives, providing financial protection against various risks. However, understanding the terminology and jargon used in insurance policies can be overwhelming.
In this blog, we will explain key insurance terms in simple and easy-to-understand language. We'll cover terms like deductibles, cashless claims, policy-term, sum assured, and exclusions. By familiarising yourself with these terms, you can navigate the insurance landscape more confidently and make informed decisions about your coverage.
Deductibles: Understanding Your Share of Expenses
Let's start with deductibles. In insurance, a deductible refers to the amount that the policyholder needs to pay out of their pocket before the insurance company begins covering expenses.
For example, if your health insurance policy has a deductible of ₹20,000, you will be responsible for paying this amount before the insurance company reimburses you for medical expenses.
Cashless Claims: A Convenient Benefit
Cashless claims are crucial in health insurance and motor insurance. It means that policyholders do not have to pay cash upfront for treatments or repairs. Instead, the service provider and insurance company directly settle the payment.
This feature provides convenience to the policyholder and ensures a hassle-free experience during treatments, as they can avail of the cashless facility.
Policy Term: Duration of Coverage
The policy term refers to the duration for which an insurance policy remains active or valid. This period can vary from policy to policy and can range from a few months to an entire lifetime. It is essential to understand the policy term to know the specific timeframe during which you are covered by the insurance policy.
Sum Assured: The Guaranteed Amount
Sum assured is the amount that the insurance company pays to the nominee or beneficiary in the event of the life assured's death or as compensation for damages or losses. It is the guaranteed amount provided by the insurance policy.
Exclusions: What is Not Covered
Exclusions are an essential aspect of insurance policies. They refer to specific items or situations that are not covered under the insurance policy. If a claim is made against these exclusions, the insurance company will not provide the benefit. It is crucial to carefully read and understand the policy exclusions to know what is covered and what is not.
Some common exclusions in health insurance policies include pre-existing diseases, certain cosmetic procedures, and dental surgeries. Life insurance policies often exclude suicides within the first year and may require additional investigation for accidental deaths. Different insurance policies have different exclusions, so it's important to review your policy's exclusions to ensure you have a clear understanding.
Riders: Enhancing Your Coverage
Apart from the basic coverage provided by insurance policies, you may also have the option to add riders or endorsements. Riders offer additional benefits or coverage to tailor the policy according to your specific needs. Some common riders include critical illness cover, accidental death benefit, and disability cover. Adding riders can enhance the protection offered by your policy.
Policy Renewal: Ensuring Continuous Coverage
To maintain insurance coverage, it's important to renew your policy within the specified time frame. Failure to renew on time may result in a lapse in coverage, leaving you unprotected. It is advisable to review your policy terms and conditions before renewing to ensure that your coverage meets your current needs. Insurance providers often send renewal reminders, making the process easier.
Conclusion
Understanding the key terminology used in insurance policies empowers you to make informed decisions and ensures that you have a comprehensive understanding of your coverage. By grasping terms like deductibles, cashless claims, policy term, sum assured, and exclusions, you can navigate the insurance landscape more effectively.
Remember to carefully review your policy documents and exclusions to ensure that you have the necessary coverage and to avoid any surprises during emergencies. Insurance provides financial protection, and having a clear understanding of its language ensures that you can make the most of your coverage when needed.