Your perfect insurance handbook (part 3) so you always know exactly what is in your policy and what it entails for you financially.
Published: Wednesday, May 23rd 2018
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
Life Insurance - Financial cover provided for your family in the event of your passing. Usually three times your annual salary.
Living Annuity - An investment product that provides an income from your retirement savings. You can choose your income each year, subject to regulatory limits, as well as how your money is invested.
Mandate - This is permission to act on behalf of the policyholder.
Maturity Date - The date an investment or policy ends and funds are paid out to the policyholder.
Needless Exposure To Danger - An exclusion clause in an insurance policy where the ISP believes you have put yourself unnecessarily in danger or acted recklessly. Examples include claims where alcohol, drugs, deliberate self-harm, or suicide was evident.
Pension Fund - This fund is a payment plan that accumulates from contributions from employers, employees, or both towards the future of the employee. Upon reaching retirement age, you are afforded a third of the total annuity. Thereafter, a monthly income from the remainder of the fund.
Physical Impediments - A physical disability that sets you at a disadvantage and prevents you from living life comfortably without help.
Policy Schedule -Information about the people who are insured, as well as the amount of insurance, and any specific terms and conditions.
Policy Wording - The terms and conditions that are set out in your policy.
Premium - The money paid to an insurance company, by a policyholder, in return for all specified insurance benefits set out in the policy.
Provident Fund - Similar to a Pension Fund, except where a Pension Fund pays out a third of the total annuity and the remainder through a monthly income, a Provident Fund (once you are at the specified age) can be withdrawn entirely in one payment.
Pro-Rata - This latin term means "in the same proportions" and is used in the legal and financial context to describe different periods of time. For example, if you have joined a company on the 4th day of the month, you will be paid for the days you have worked, instead of a full calendar month.
Replacement Cost - The cost to replace an asset at the same or equal value in the event of a robbery or damage to the asset.
Savings and Investments - Long-term savings plans that include retirement planning, guaranteed investments and endowments.
Surrender - To end or cancel your insurance policy which may include certain financial penalties.
Third Party Insurance- The cheapest form of coverage for your car. It only covers the expenses of the other driver.
Travel Insurance - Covers medical expenses, trip cancellation, lost luggage, flight accident, and other losses incurred while travelling. Both internationally or within one's own country.
Waiting Period - A period of time in which no claims can be made.
Waiver of Premium - This relinquishes the policyholder's obligation to pay any further premiums should he become seriously ill or disabled. This ensures people can still benefit from a policy, even when they cannot work.