Scratching our heads when reading insurance policies is probably a normal occurrence. Buried within the fine prints of the policies are with terms and jargons alien to most of us. The insurance companies are not creating this to stump us on purpose, as some of the language used in the policies is actually required by law. Understanding some of the basic insurance terminology may just make it easier for us to understand our policy.
A Premium
(and no, you are not paying more) is the amount of money you pay to your insurance company for your insurance policy, in return for the insurance company’s promise to pay out an agreed amount should the covered event(s) occur.
Free-look Period
(yes, looking is free!) is a time frame for the policyholder to a newly purchased policy to review the terms and conditions and if not agreeable with them, may choose to return the purchased policy and have the premiums, less any policy set-up expenses, refunded. What this means is that you can return the policy within the Free-look period if you are not comfortable with the terms and conditions. However, should there be expenses such as medical examination and/or other charges incurred in processing the policy, the insurance company will refund the balance of the remaining premium after deducting these expenses. Most policies that cover the individual (as opposed to a corporate insurance policy) would offer this Free-look Period feature.
Waiting Period
A waiting period is the time (duration) that must pass before an insurance policy is able to be claimed against. While these are not common in motor insurance, they are more prevalent in other types of insurance, such as health insurance. This is to prevent people from only starting a policy when one is already in need to medical attention with significant expenses.
Co-insurance
Co-insurance refers to the portion of the bill the policyholder agrees to pay when a claim is filed. In the instance where your policy has a hospitalisation benefit with say, 30% co-insurance, and the total bill comes up to $5,000, you will pay $1,500 while your insurance provider foot the rest of the bill. This is one of the ways the insurance providers maintain lower premiums whilst inculcating a degree of responsibility on the part of the policyholders to be careful and take care of themselves as they would have to pay a portion of their own medical bill.
Deductible:
This is an amount of money that must be paid by the insured before a claim can be made against their insurance policy. For instance, if the total bill for repairs of your damaged vehicle is $3000 and your policy has a $400 deductible, you need to pay the first $400; and the insurance company will pay or reimburse the remaining $3600. This feature is also prevalent in Health insurance. This encourages personal responsibility overone’s owned assets and health.
Infectious Disease Benefits
The list and the specific definition of the diseases are indicated in the policy wording where in the event the insured person contracted any of the specified infectious diseases, the insurance company will pay the benefits as stated. However, there is usually a waiting period from the start of such policies where should such an infectious disease be diagnosed within 30 days of the effective date of the Policy, the benefits are not payable. This is to prevent any one take advantage of getting covered only when one has taken ill. Depending on insurance providers, payment of these benefits is made for each and every diagnosed event during the Period of Insurance, subject to each diagnosis date having a specified number of days separating the event as stated in the policy. This is to demarcate different episodes of illness so to manage policy benefits pay outs.
Recuperation Benefits
When the insured person has been discharged with a minimum number of specified consecutive days after hospitalisation due to an accident and is on medical leave, the insurance provider will pay a daily benefit according to the policy, up to a maximum of specified days for one accident occurrence. The number of days may vary depending on the provider. However, the medical leave granted must be certified by a medical practitioner from the same hospital where the insured person was hospitalised.
