Insurance Meaning: What Is It And Related Terms Explained
Insurance Meaning: What Is It And Related Terms Explained
Getting insurance is YOUR responsibility to your family and loved ones
- Jeremiah Say
So, you want to get insurance for your loved ones, but when you sat down to look for suitable insurance, you couldn't understand a lot of related terms.
Worry not, we have all been through this situation. That is why we've written this blog where we have explained these terms in an easy-to-understand way.
So, what do you mean by insurance?
Insurance meaning - It is an investment that you make to protect yourself and your loved ones from various mishappenings. And so, you pay a certain amount to the insurance company to cover you financially if it is ever required.
So, because your hard-earned money is involved in taking insurance, it becomes all the more important for you to understand every term properly. Having an understanding of the very basic terms will make it easier for you to decide which insurance policy you want to get for your family and your loved ones.
And not just the type of insurance policy, you will also be able to understand the benefits of each of the insurances available in the market better. Then you can compare which insurance policy is the most suitable to your requirements.
Having basic level knowledge of the terms that are used in most of the insurances that are there, you will also remove the risk of getting made a fool of. Because if you go and buy an insurance policy whose terminologies you don't know, there are chances that you end up getting a policy that is the opposite of what you need.
But before we move forward, if you are looking for an income source through which you can earn more then check out the GroMo app. You can earn ₹1 Lakh a month by selling financial products and Insurance using the GroMo application.
By the end of this blog, you'd know:
...And much more!
All to help you select the right insurance policy for your family and your loved ones.
So, let's get started!
Health insurance meaning - it is the policy that you buy to cover the cost of medical care. Also known as medical insurance, it covers either the whole or a part of the risk of a person's medical expenses. Below are some of the general health insurance terms and definitions that you should know:
1. Sum Insured
Sum insured meaning - The maximum amount which an insurance company can pay for a year, in case you are hospitalized, is known as the sum insured. If your medical bill is more than the sum insured, then you'd have to pay the extra amount on your own. The insurance company will not be responsible for paying that extra cost.
2. Preexisting Condition
Preexisting condition meaning - If a person has an illness or a medical condition before they bought health insurance, then that is known as a preexisting condition. As per Insurance Regulatory and Development Authority (IRDAI), any medical condition diagnosed up to 48 months before buying health insurance is considered to be a preexisting condition.
3. Waiting Period
Waiting period meaning - There is a specified period before which you won't be able to avail the benefits of your health insurance policy. This specific time period is known as the waiting period. It starts from the date you take a health insurance policy. The waiting period for health insurance is different in every company.
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Auto insurance meaning - it provides coverage to commercial vehicles like trucks, cabs, and other commercial road vehicles. It primarily provides financial protection against physical damage to the vehicle or injuries to the driver from road accidents. Below are the definitions of some of the general auto insurance terms:
1. Third-Party Liability
Third-party liability insurance meaning - Insurance or the section of it that protects the first party or the policyholder (you) from legal liability to a third party (other person/vehicle) in a road accident is called third-party liability. Any damage caused by you to the vehicle or the other person will be partly or wholly covered by your auto insurance.
2. Own Damage Cover
Own damage cover meaning - The auto insurance policy that provides coverage for your vehicle against unforeseen damages is known as Own Damage Cover or OD Insurance. This includes coverage for damages caused to your car due to road accidents, natural calamities, fire, etc.
3. No-Claim Bonus
NCB meaning - If you don't claim your auto insurance during a policy year, then a reward is given to you. This is what NCB means in insurance (No Claim Bonus). It is a discount of 20% to 50% which is given during the time of policy renewal. The no-claim bonus is given on your premium amount.
And on that note, if you are looking for an app to sell insurance policies, then check out the GroMo app now! Using our app you can sell various insurances like car insurance, commercial vehicle, health insurance, and more.
Car insurance meaning - it protects your personal vehicle from mishappenings like road accidents, vehicle theft, damage caused by natural disasters, etc. Car insurance is mandatory in India for all people who own a personal car. Below are the 3 general car insurance terms and definitions that you should know:
1. The Insured Declared Value
IDV meaning in insurance - The sum insured under the car insurance policy of a vehicle is known as the Insured Declared Value (IDV). The IDV of a car is equal to the manufacturer's listed selling price minus the depreciation with age. The starting date of the policy is when the listed price of the car is agreed upon.
2. Comprehensive Insurance Policy
Comprehensive insurance meaning - a car insurance policy that protects both the vehicle and the owner is called a comprehensive policy. Under this plan, you get multiple coverage benefits like protection from an explosion, theft, strikes or riots, etc. However, a person doesn't need to get a comprehensive car insurance policy mandatorily.
3. Anti-theft Device
Anti-theft device meaning - An anti-theft device is used to reduce the probability of your car getting stolen. The insurance company considers it to be a sign of reduced risk for its insurance if you install an approved anti-theft device in your car. By installing this device, you become eligible to get an own damage premium discount.
Term life insurance meaning - it is a legal agreement between an insurance policy-providing company and the person assured. In this agreement, the insurance company agrees to give a certain amount of money to the person insured or the nominee on completion or after a certain pre-decided event.
Given below are a few general life insurance terms and definitions for you:
Nominee meaning - In case of policy holder's death, the person or close relative who will get the benefits of the life insurance policy is called a nominee. The nominee is decided by the policyholders themselves. The nominee is legally authorized to get the assured amount in case of the policyholder's death.
Underwriting meaning in insurance - Writing the application and assessing the amount of risk the policyholder presents to an insurance company is known as underwriting. There are professional underwriters who help you in getting a policy and maximum coverage by reviewing the criteria on your application.
Riders meaning - The option that allows you to add more coverage and protection against risks at economical rates is known as riders. This enhances your policy's coverage and can be bought at any time. You can add riders to your policy either at the time of buying the policy, as well as after you've bought the policy.
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Homeowners insurance meaning - The insurance policy that provides financial protection to the overall structure of the house, as well as the household items, is known as homeowners insurance or property insurance. This includes unexpected loss or damage caused due to natural calamity, theft, etc.
Here are the 3 general homeowners insurance terms and definitions that you should know:
1. Actual Cash Value
Actual cash value meaning - The cost of repairing or replacing a damaged property is known as the actual cash value. In this, the property of the same kind and quality is built with less depreciation. In other words, the new house being built will be of the same physical condition as the original property that got damaged.
2. Additional Living Expenses
Additional living expenses meaning - This section of the insurance policy gives reimbursement for expenses like motel rooms, meals, etc. when a covered peril forces the policyholder to get a temporary shelter. This benefit of homeowners insurance is also known as loss of use coverage.
3. Dwelling Policy
Dwelling policy meaning - The policy which does not include liability coverage is called a dwelling policy. This applies to both personal property and structural coverage of a homeowners policy. It provides financial protection to the structure of the house and not the household items or land.
Also, if you are a finance professional and sell insurance, then check out the GroMo app right away! With the GroMo app, you can sell all types of insurance including, term life insurance, investment, and many more.
Dental insurance meaning - The policy which provides financial coverage for dental procedures is called dental insurance. It covers the medical expenses of dental treatments including surgeries and Outpatient Department (OPD) consultations. Below are a few general dental insurance terms and definitions:
1. Closed Network Plan
Closed network plan meaning - Insurance policies that need you to go to an in-network dentist to claim the benefits of your dental insurance policy are called closed-network plans. Such plans are made to keep the cost of the service availed low. These plans are also known as closed panel plans.
Co-insurance meaning - Dental service costs that come in your share are known as co-insurance. Whatever the total charged amount is, the co-insurance is calculated as some percentage of the same. Co-insurance is usually applied after you pay the deductible. It comes under those dental insurance plans that do not cover 100% cost of service.
3. Covered Service
Covered service meaning - The dental procedures, services, and medications that a plan covers are known as covered services. Not all the dental services provided in a country are covered. And if a service is covered under your plan, you may still be required to pay a deductible, co-insurance, or co-payment.
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