8 Terms in Insurance that You Must Know

Insurance is considered as a form of self-protection, so that financial conditions remain stable and healthy in the future. Even so, it turns out that many people are not familiar with the terms in the world of insurance. Here’s a dictionary that you need to understand before making a product purchase.

Here are some names you should know:

1. Insurance Policy

Aruansi policy is a written cooperation agreement contract made by the policyholder customer and the insurance insurer (insurance provider company). All insurance contract contracts, whether it’s health, life, or loss insurance are referred to by the same name, namely insurance policies.
The insurance policy itself contains an agreement that the insurance provider company is willing to bear the risk of the insured, whose name has been stated in the contract agreement within a certain time in accordance with the agreement of both parties. To get this protection, policyholders need to pay a fee in advance deal.
Not only talking about the rights and obligations that must be carried out by each party, but there are also details of the contract agreement. Such as the rules for exclusion of protection, coverage of protection, general terms of the policy, to a copy of the insurance application letter or claim letter.
The insurance policy is an important document, so you must keep it properly if you have registered for insurance. The reason is that you may need to access it from time to time as proof of the contract agreement made with the provider company. Even when you make a claim, later you will need a policy.

2. Insured Insurance

The term insured in the policy refers to the party or person who is entitled to receive compensation guarantees from the insurance provider company, in the event of a risk or event in accordance with the contract agreement.
For example, the insured in life insurance is the head of the family who is considered to have economic value. If the head of the family as the insured one day dies, the insurance provider company will issue a certain amount of funds according to the agreement as compensation given to the beneficiary.
However, the insured is not necessarily a policyholder. And the policy holder does not necessarily act as the insured in the insurance. For example, you buy health insurance for your parents, so here the insured are your parents, and you act as the policyholder yourself.

3. Insurance Premium

As a policyholder, you are obligated to pay insurance premiums. The term in this insurance is defined as a number of payments made by the policyholder to the service provider company to obtain protection according to the contract agreement.
The amount of the insurance premium itself is determined by the provider company, so the nominal can differ from one insurance company to another. Where is the size of the nominal? by several factors, ranging from the coverage of protection provided, the insured’s medical record, the age of the insured, to the sector of work.
Usually, the more extensive and complete the protection offered by an insurance company, the higher the premium set will be. In addition, if the insured’s condition is considered to have a high risk, then the premium will automatically be more expensive. Insurance premiums are usually given in the form of monthly, semi-annual, to annual options.

4. Insurance Benefits

Insurance benefits are defined as protection provided by the provider company for the insured. In life insurance, insurance benefits are usually in the form of sum assured or a number of funds that will be given to beneficiaries who have been appointed in the policy.
While for a health insurance, insurance benefits can be in the form of medical care costs, outpatient costs, to surgical benefits. This means, if the insured one day falls ill and needs medical. Then the insurance provider will reimburse you for the medical care costs incurred.
In this case, benefits can be provided in different forms depending on the type of insurance and the provider you choose. All insurance benefits that will be obtained by the insured are listed in detail in the insurance policy. So, make sure you have read the contract agreement carefully before deciding to buy health insurance.

5. Claim

A claim on insurance is a claim submitted by the policy holder to the insurance provider company, in order to provide compensation in accordance with what has been written in the policy.
For example, an insured person with health insurance is sick with dengue fever and must be hospitalized. Then the policyholder has the right to file a claim and later the insurer will pay the cost of hospitalization as well as other costs in accordance with the definition of the benefit that the insured is entitled to.
However, it is important for you to know the types of what is covered by insurance. Because not all diseases can be covered by health insurance, for example congenital diseases, HIV/AIDS, to diseases caused by epidemics, are usually rarely covered. In addition, the time for claiming is usually a maximum of 30 days after the insured undergoes treatment.

6. Cash Value

Cash value or cash value is the amount of money that can be redeemed during a certain period by the policyholder. You can find this cash value in endowment or unit link insurance. For example, in dual-purpose products such as education insurance.
Usually on these products there is a cash value that can be disbursed when the policy is 3 years old, 6 years old, and so on. The specified disbursement period may vary from the insurer or the product provider company. This cash value is the investment return formed from the premium, which has been routinely paid by the policyholder.

7. Lapse

Lapse is the cancellation of rights that occurs due to inactivity certain period of time. In addition, lapse can also be caused by customer negligence in carrying out their obligations. For example, the policyholder does not pay the premium according to the agreement, exceeding the grace period which is generally 45 days. This causes the insurance benefit to be cancelled.

8. Premium Leave

At a certain period of time, policyholders can take premium leave or not pay premiums without losing insurance benefits. Usually this one insurance term can be found in insurance with investment features. Because premium leave can be done if the cash value of the policy is sufficient to pay the existing premium costs.
So, it doesn’t really mean you really don’t pay premiums when you take premium leave. However, the insurer uses the cash value that you have in the insurance policy to cover premium costs. So even if you do not pay premiums within a certain period, the insurance benefits can still be valid and not lapse.

Those are some important terms insurance that you need to understand. If you plan to buy a product, be sure to read the contract agreement in detail so that the insurance benefits obtained are effective. In addition, it would be better if you balance it with saving and other investment activities so that you don’t just depend on insurance.