Common Insurance Terms You Should Know

Insurance can be a complicated concept and confusing if it’s not explained. Many people don’t understand the terms and conditions of their insurance policy due to a misunderstanding of the most basic terms. Below is a list of some of the most common general insurance terms, explained.  

Policy Holder 

A policy holder is one who purchases and owns the insurance policy. They are covered by all the details included in the policy. They are responsible for making payments, cancellations and any changes.  

Claim 

A claim is a formal request made by a policy holder, asking for compensation under the terms of their insurance policy. The insurance company reviews the application and pays upon approval. A claim can cover anything from medical exams to death benefits.  

Premium 

A premium a sum of money paid to the insurance company for an insurance policy. This payment keeps your policy active. Failure to pay the premium may result in loss of coverage.  

Grace Period 

Grace period is additional time allowed to policy holders to pay their premium. If premiums are not paid within the due date of the policy, there is a grace period allowing for it to be paid later. In general insurance policies, the grace period is 30 to 90 days depending on the plan.   

Underwriting 

Underwriting is the process of assessing the risk of issuing coverage to an individual or business. During this process, the underwriter determines how much coverage a client should receive and pay. This assessment helps an insurance company understand if offering a policy to someone will be profitable.   

These are only some of the common insurance terms that you should know when purchasing insurance. If you have any questions, or want to discuss any insurance policies, or terms, please contact our team if you have additional questions. We are here to help!  

References: 

 Insuranceopedia, What is a Claim? - Definition from Insuranceopedia.               Investopedia, Insurance Claim Definition (investopedia.com).                                           Turtle Mint, 2022, https://www.turtlemint.com/what-is-insurance/insurance-terms/#:~:text=The%20top%20Insurance%20Terms%20that%20you%20should%20know,period%20...%208%208.%20Exclusions%20...%20More%20items. Accessed 2023.