Creating an insurance portfolio can often be a daunting task. Here’s part 1 to a user-friendly handbook to understanding insurance terms.
Understanding just exactly what your insurance provider is saying in a contract can sometimes be a bit of a headache. With so many terms and clauses thrown at you on a daily basis, applying for insurance can seem like a chore with it's 'dread purchase' status.But once you understand both the meaning of certain insurance terms and the reason for their implementation, getting exactly what you want out of your insurance can be easy.
Here Are 20 Insurance Definitions To Make Your Insurance Search Easier
Ancillary Benefits - Secondary or supplementary benefits that accompany a prime benefit. Accrues from the same performance from which the prime benefit accrues.
Actual Cash Value (ACV) - The value of a property as figured by determining what it would cost to replace the property. This amount is then adjusted by subtracting an amount that reflects depreciation.
Beneficiary - A person or entity that you choose to receive the benefit on your death or policy.
Benefit - Any amount payable to a beneficiary as stipulated in a specific policy.
Business Insurance - Insurance that covers a business and its assets in order to protect itself against possible losses.
Car Insurance -Insurance that covers your car against theft or damage as a result of an accident.
Cede - The transfer of rights in a policy to another person or entity.
Cessionary - The person or entity to whom you have transferred your rights in a ceded policy.
Collateral Cecession - The transfer of rights in a benefit (collateral cession) or to a benefit (absolute cession).
Claimant - A person who makes a claim in order to receive benefits.
Claims Free Period - A period in which no claims are issued, usually leading to a benefit.
Commencement Date - The date that you started receiving coverage in your insurance policy, also known as 'the start date'.
Compound Interest - The addition of interest credited to a loan is known as compound. Compound interest is simply interest on current interest. It is the result of reinvesting interest, rather than paying it out. So, the interest in the next period is then earned on the principal sum plus previously accumulated interest.
Comprehensive Car Insurance - This is the recommended car insurance cover most insurance providers will offer you first as it covers just about everything from Third Party damage, fire damage, theft and replaces your car in the event that it is written off.
Consumer Price Index (CPI) - This is the weighted average of the price of consumable goods and services such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
Contribution - The money that you as a policyholder pay to a financial company or insurer for the product set out in a policy.
Dependant - Someone who relies on someone else for financial support.
Disability Insurance - Insurance that provides cover in the event of you becoming disabled.
Domicilium Citandi Et Executandi - A Latin term meaning the address where you agree to accept notices and legal processes, for example, documents and summonses.
Duration - A measure of the change in the price of a bond relative to the change in interest rates. For example, if interest rates rise/drop by 1%, a fund with a 5-year duration is likely to lose/gain about 5% of its value.
CLICK HERE for Part 2 of the Easy-To-Use Insurance Handbook.