1)what is Insurance?
Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
The term ‘insurance coverage’ means, when an individual takes an insurance policy the insured will be covered by insurance company for a specific amount for themselves or the things that he had taken the insurance policy, for which he would be paying premiums to the insurance company. The insurance company will pay the insured in case of damage or claims made by the insured according to their ‘insurance coverage’.
3)What is a premium’?
It is the amount to be paid for a contract of insurance to the insurance company. It is the sum that a person pays monthly, quarterly or annually according to their plan, in return of the coverage he/she has taken from the insurance company.
4)What do you mean by term ‘Insurer’ and ‘Insured’?
Insured is the one who holds the policy and Insurer is the company that covers the insured.
5)Who is the beneficiary?
Beneficiary is the one whom you have nominated for the insured amount in case of your death.
6)What is the contestable period’ in insurance policy?
‘Contestable period’ is usually 1 or 2 years, during which the insurance company holds all the right to investigate the policy and decide whether to pay or not to pay to the insured.
7)What is the difference between “revocable beneficiary” and “irrevocable beneficiary”?
‘Revocable beneficiary’ designation gives right to the policy holder to change the beneficiary name without the consent of the named beneficiary. While in ‘Irrevocable beneficiary’ the policy holder has to take consent of the beneficiary before the name is changed.
8)What is no-claim bonus?
No claim bonus is a benefit for those who have not claimed insurance during the preceding year of cover. This will lower the premium on the following year.
9)What is ‘declaration page’ in insurance policy?
‘Declaration page’ in insurance policy, bears all the information of the policy holder like name, address, vehicle information, type of coverage and loss payee information.
10)What do you mean by ‘Loss Payee’?
The loss payee is a person or institution (Bank) that receives the insurance payment on the loss of the property or vehicle you own. It is a legal definition used to cover the investment of other parties or bank that is owned by you. For example, you have a car on loan, and also you have insurance for that car. Now you met an accident, and your car is a total loss(meaning completely damaged beyond repair). Your bank still owes money from you in such case when you claim the insurance; the insurance company will pay money directly to Bank or person you owes money. Here bank is a loss payee.
11)What do you mean by ‘Deductible’?
Deductible is one of the several types of clause that are used by the insurance company as a threshold for policy payment for health insurance or travel insurance. Deductible is a decided amount that you have to pay from your pocket while claiming the insurance. For example, you have a deductible of $500, and you have insurance coverage for $2000, then you are responsible for paying for $500 and the remaining amount $1500 will be paid by insurance company.
12)What is Co-insurance?
Co-insurance term is usually referred to health insurance companies. In this type of policy, you share the coverage with, the insurance company in percentage of the policy value, after paying deductible or co-payment. It is the split of insurance coverage between you and insurance company; usually the split would be 80/20 % where you are liable to pay 20% and the remaining amount by the insurance company. For example, for health policy you have claimed for $200, according to policy clause you have to pay deductible, let say $100, now after paying deductible the remaining amount is $100, now you have a co-insurance which is split into 80/20%. So you will pay $20 out of $100 from your pocket while the $80 will be paid by co-insurance(meaning the insurance company).
13)What do you mean by term “Annuity”?
An annuity is the term used for the regular amount paid by the insurance company to the insured, after a certain period of time. The payment can be monthly or quarterly, this is often done to supplement income after retirement.
14)What is the Surrender Value?
Surrender Value is the amount when you stop paying the premium and withdraw the entire amount. The policy ceases as soon as you withdraw the money, and the insured will lose out all the returns on it.
15)What is Paid Value?
The paid value is something, when the insured stops paying the premium but do not withdraw the amount. The sum assured by the insurance company is reduced proportionally depending when insured has stopped paying the premium. You will get the amount at the end of the term.
16)Is it advisable to replace the policy with another policy?
If it is not a long duration that you have bought the policy, then you can replace the policy. But in other case it is not advisable as you will lose all the benefits of the previous policy also the premium will go high as you go older. Also, the two-year period of contestability will also begin again.
17)How to claim the policy?
In order to claim the policy, you have to fill up the claim form and contact your financial advisor from whom you have bought the policy. You have to supplement all the required documents like original payment receipt to your insurance company. If everything is ok, you will be paid within seven days of the policy claimed.
18)What happens if you fail to make required premium payments?
Usually, Insurance Company gives a grace period of 10-15 days to the insured if they fail to pay the premium before the due date. Further, if you fail to pay a premium, then your policy will lapse. You can revive your policy by paying the outstanding premium along with the interest, counted from the date the policy got lapsed. Different Insurance Company has a different norm for reviving the policy.
However, if your policy is in force for alonger period like say more than2-3 years,and if you fail to pay a premium, then insurance company will deduct the premium amount from your accumulated funds, especially in permanent life insurance. This will continue till there is an available fund after which your policy will be terminated.
19)Is it safe to pay the premium through Insurance Agent?
It is safe to pay the premium through your agent as far as you are making the payment through cheques on the name of Insurance Company and receiving all the receipts for the payments.
20)Is it possible to get the full payment on cancelling the new policy in free look period?
‘Free Look Period’ is a time-period where the insured can cancel their newly bought policy in a specific period of time from the date of issuing the policy without any penalties or surrender charges.
Yes, it is possible to get the full payment in free look period; you can cancel your new policy in 15 days by returning the policy to the life Insurance company after you receive all the documents related to the policy.
21)What is the difference between the participating and non-participating policy?
Participating policy is a policy, where the profit or benefits of the insurance company is shared with the insured in theform of a dividend or reversionary bonuses. While, the non-participating policy, does not share their profit with insured.
22)Is it possible to restrict the premium payment for a lesser number of years than the duration of thepolicy?
Certain Insurance company have a provision of Limited Premium Payment, through which you can pay the premium in 3, 5, 7 or 10 years depend upon your income,and you still can have the coverage for the entire tenure of the policy.
23)Can beneficiary claim the policy if the insured person is missing or disappeared for several years?
It is possible to claim, if the beneficiary has court declaration that says that the insured person is missing or legally dead (disappeared for more than 7 years).
24)Can an individual take two policies and claim for both of them?
Yes,an individual can take two policies and claim for both.
25)What do you mean by ‘Additional Insured’?
‘Additional Insured’ is the status associated mainly with property insurance and liability insurance. The additional insured will be protected under the main policy holder. For example a vehicle insurance policy which covers all the members of family and not only the owner.
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