ARTICLES

Insurance can be tricky, but understanding some key insurance concepts can make it easier to navigate. Here are five important terms explained in simple words:

Indemnity

Indemnity is an agreement where one party compensates another for any losses or damages. Think of it as a safety net. If you have indemnity insurance, you pay monthly or annual premiums, and in return, your insurer will cover costs if you face certain losses. This is one of the fundamental insurance concepts that ensure you are protected against unexpected expenses.

Underwriting

Underwriting is the process of examining an insurance application and determining an applicant's risk by reviewing his or her medical information, financial information, and lifestyle, as well as taking the applicant's age and gender into account. 

Claim

A claim is when you formally ask your insurance company for money to cover a loss or an event specified in your insurance policy. After you file a claim, the insurance company reviews it. If everything checks out, they will pay you or an approved party to cover the loss. Knowing how to file a claim and what to expect is a vital part of grasping key insurance concepts.

Policy Period

The policy period is the time span during which your insurance policy is active and provides coverage. For example, if your policy is for one year, you are protected during that year, and you need to renew it afterwards to continue having coverage. Being aware of your policy period helps you manage your insurance policy effectively and ensures continuous protection.

Exclusion

Exclusion refers to specific conditions or items that your insurance policy does not cover. These are clearly listed in the policy. If something falls under these exclusions, you'll have to pay for those costs yourself, as they don't count towards your plan's limit. Recognizing these exclusions is crucial to fully understand your insurance policy and avoid unexpected expenses.

By understanding these key insurance concepts, you can make more informed decisions about your insurance needs and how to protect yourself and your assets effectively. An informed approach to your insurance policy ensures that you are adequately covered and prepared for any unforeseen circumstances.