Insurance policy is categorised into two:-
a)General or Non-life Insurance
b)Life Insurance
General Insurance
1)What is General Insurance policy? What does it cover?
General Insurance is basically an insurance policy that protects you from losses and damages other than covered by life insurance. For example it covers
- Personal property such as car or house
- Accident and health Insurance
- Liability Insurance – legal Liabilities
- Property against natural calamities like flood, fire, earthquake etc.
- Burglary and theft
- Coverage on transport vehicles carrying goods like Cargo Ship
- Coverage against machinery breakdown
- Travel
2)What does ‘Indemnity’ term means?
‘Indemnity’ term in theinsurance is used to cover the loss or damage claimed by another person. For example, the owner of the gym has indemnity insurance to compensate it customers in case of injury or accident and to avoid the financial loss due to a lawsuit.
3)What do you mean by term ‘Double Indemnity’?
‘Double Indemnity’ is a provision provided by certain insurance companies, where according to their policy they are liable to pay double the face amount in case of death by accidental means or murder. This type of policy does not cover suicide, and death caused by gross negligence of the insured person. For example, a person who dies due to natural causes including heart disease or cancer, Murder or conspiracy by beneficiary, or death due to an injury from sheer negligence.
4)What is subrogation?
‘Subrogation’ is referred as the process of seeking reimbursement from the responsible party for a claim that they had already paid. For example, you have an accident where your car gets damaged,and you have car insurance, the insurance company will pay you the money. But the insurance company comes to know that the accident occur due to other party fault, now they will claim themoney from the other party this is known as ‘subrogation’.
5)What do you mean by term ‘cash value’?
‘Cash Value’ is the cash amount offered to the policy holder while cancelling the policy, where a portion of thepremium paid goes into saving plan. It is also referred as surrender value. This term is normally used for life Insurance contract.
6)What happens to the cash value after the policy is fully paid up?
After the policy is fully paid up, the company plans to use the cash value to pay your premium until you die. If you take the cash value out, the insurer will require you to pay the premium or reduce the amount of the death benefit so the remaining cash value will support.
Life-Insurance
7)What is thedifferent type of Life Insurance?
There are two type of life insurance:
- Term Life Insurance :
Term life Insurance is a type of life Insurance, which provides coverage for fixed rate of premium for a limited period of time. Term Insurance can cover you for the term of one or two years.
- Permanent Life Insurance:
Permanent Life Insurance coversan individual for the whole life; people take permanent life insurance about 25-30 years normally. The premiums are slightly higher than Term Life Insurance.
8)What is Elimination period in insurance?
In the disability income insurance or loss of income insurance, the elimination period is the amount of time you have to wait before benefits are paid. In other words,it is a time-periodbetween the beginning of theinjury and the benefits you are paid off. Longer the Elimination period lower the premium and vice versa.
9)What is an ‘Endowment Policy’?
An endowment policy is a combination of saving along with risk cover. This type of policy is specially designed to accumulate wealth and at the same time cover your life. In this type of policy the insured will pay a regular premium for specific time period. And in case of death the money will be paid to beneficiary but, if you outlive the policy tenure, you will receive the sum assured along with accumulated bonus.
10)What does it mean when company says “no physical exam”?
Such insurance company that says,“No physical exam” gives freedom to the policyholder to take policy and exempt the physical test that is mandatory by certain life insurance company. Normally, such insurance company is more expensive and the insured has to pay a higher premium on their policy.
11)What is ‘group life’ insurance?
‘Group life insurance’ is a single policy that covers an entire group. Such policy is taken by an employer for thebigger organization to cover their employee, as anindividual policy holder, it may cost more than a group policy.
12) Does beneficiary have to pay tax on the proceeding of life insurance policy?
Generally, the benefits on the life insurance policy are tax free and the beneficiary is not liable to pay any tax after the death of the policy holder. But if you are changing your beneficiary for monetary gain or other purposes then the beneficiary has to pay tax on it.
13)Is it possible to convert a part of term life insurance into permanent life insurance?
Yes, it is possible to convert as far as you are having a convertible life insurance policy. But there is a deadline that has to be taken care of, for converting term life insurance into permanent life insurance. Also, your premium will rise soon you convert your policy.
Auto-Insurance
14)What is third party Insurance?
An insurance policy that covers the damage caused by another person or party is known as third party Insurance. In this type of insurance, the insured is the first party, insurance company is the second party while the damage done by another is referred as thethird party. This type of Insurance policy is purchased for vehicles, so that in case of theaccident they can claim it.
15)What is Personal Accident cover? Does it cover anywhere in the world?
Personal Accident Insurance is for your personal vehicle and covers any fatal accidents to you or your family excluding driver. Most of the insurance companies gives coverage anywhere in the world.
16) In what all Instances you cannot claim your Personal Accident Insurance?
- If your injuries are a result of sickness or disease
- If your injuries are self-inflicted or attempt to suicide
- Stress fractures, sprains and strains
- Injury occurred while committing crime
- Deliberately cause an car accident
17)What is ‘gap insurance’?
‘GAP insurance’ is also known as Guaranteed Auto Protection. It covers the difference between the actual cash value of the vehicle and the balance still owed on financing like loan. GAP insurance amount is generally paid up front.
18)What is the difference between the ‘single limit liability’ coverage and ‘split liability coverage’?
‘Single limit liability coverage’ covers asingle person for bodily injury and property damage, for instance, in case of accident only single person will be covered no matter how many persons were injured. While, in ‘split liability coverage’each person is covered separately.
19)What is ‘collision coverage’ and ‘comprehensive coverage’ in Auto insurance?
Collision coverage covers when you have a collision with any other object or vehicle while comprehensive coverage covers your vehicle other than collision, when your car is not in use.
20)What is a ‘PLPD’ insurance stand for?
PLPD stands for ‘personal liability and property damage’. Personal liability covers when an individual cause injury to others in an accident while property damage is done when any property get damaged. In both, the injured party or third party will claim for insurance money from the insurance company of the offender.
Home Insurance
21)Does it cover silver or golden ornaments if I have ‘Home insurance’?
You can cover your valuable items like silver or golden ornaments in home insurance, but your premium and policy amount will rise accordingly.
22)What is the difference between the ‘All perils’ and ‘Specified perils’ coverage in home insurance coverage?
In home insurance coverage, ‘All perils’ protects you from thewidest range of risks besides common risks while ‘Specified perils’ will give coverage only for the common risks, that is listed in your policy.
23)What is ‘schedule of loss’ in home insurance?
Schedule of loss is a document submitted to theinsurance company to claim the policy; it gives the information of damaged or lost items like model number, when it was purchased, cost of the item etc.
24)What in case if my house completely damagein, fire or flood,and if I stay in a rented house, will insurance company bear all my additional living expenses?
If your policy has Additional Living Expenses coverage, then sure the insurance company will pay you additional expense that you require, to maintain your normal standard of living.
25)To claim your personal property in a ‘Home insurance’ policy, how important is to keepinventory list?
Incase of fire or natural calamities, if your house is completely damaged and if you want to claim your personal property to insurance company, inventory list is very important. The insurance company will only pay you for those items where you are able to show the evidence that the damaged items belong to you. So, it is advisable to keep a list of inventory in a safe place.
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