When it comes to “insurance speak”, it very often comes across as a foreign language. While looking and sounding very impressive in a document, for the normal person, it’s easily misunderstood.
You really don’t want the shock of an insurance claim being delayed or denied, just because you didn’t understand what was said in the policy.
Understanding insurance jargon is essential, not only to interpret your insurance cover better but to avoid any surprises when it comes to claiming.
This is where you convert a lump sum invested into the payment of a regular stream of income over a certain period, like a pension or annuity. In other words, when you retire, this will be your monthly income.
Claimant vs beneficiary
The beneficiary is the person nominated by the owner/ life insured of an insurance policy who would be entitled to the claim amount upon the death of the said owner/life insured.
A claimant, on the other hand, can be anybody who puts in the claim. For example, it can be the employer of the policyholder who died or the undertaker.
This is when you do not qualify to receive a payment in terms of a particular claim. This happens due to not having met certain terms, conditions or criteria.
This is the obligation of the person taking out an insurance policy to reveal the truth about his or her situation, sharing all the information the insurer requires upfront to ensure that a reasonable risk assessment is possible – like being an open book.
This could include information about your medical history, for instance.
A “lapse” of an insurance policy is basically a temporary suspension, unlike a cancellation that is a final movement. A “lapse” happens automatically after a certain number of premium payments are missed.
In other words, it refers to a “lapse in insurance coverage”. If the contract had a life insurance component to it too, this would also “lapse” at the same time.
This relates to a life insurance policy where the end of the premium paying term has been reached. In other words, there are no more premiums payable. The insured is then free of all payment obligations.
This is normally a benefit that kicks in at retirement age, disability or death of the owner of the policy. The policy then stays intact with cover for all the insured lives until death, without the obligation of paying the monthly premiums.
Repudiation is a breach of the terms or conditions of the insurance agreement that justifies a particular claim to be denied. In other words, the insurer can deny being liable to pay in this instance.
Surrendering an insurance policy is normally done by the owner when he/she wants to withdraw all funds in the policy due to a financial need or he/she does not want to continue with the policy any longer. The policy will cease to exist after the surrender payment.
It can also refer to a partial cancellation – like a withdrawal and typically involves the payment of some kind of penalty if it is done ahead of time.
Understanding insurance jargon really is no easy task. If and when you come across a phrase you don’t understand, please get in touch with any of the friendly brokers at Vinsure. We provide peace of mind.
Smith, C. (2019, December 9). Don’t get a nasty surprise! How to understand insurance jargon. Retrieved from https://bit.ly/30tNik1