Definition: Insurance is a contract in which between two parties. One party agrees to undertake the risk or loss of the other party in exchange of certain amount of money and a promise to pay certain amount of money for the loss.
In other words, Insurance is an agreement between an individual and the insurance company in which the individual pays certain amount of money known as premium in exchange of which the company pays some money to the individual for the uncertain event.
Premium
Insurable interest: An interest on a person or thing that will support the issuance of insurance policy.
Causality: Liability or loss resulting from an accident.
Insurance claim: A demand made by the insurance holder or from beneficiary, for payment of benefits as provided by the policy.
Coverage: The scope of protection provided under an insurance policy.
Death benefit: The limit of insurance or the amount of insurance that will be paid in the event of the death of a covered person.
Exposure: The measure of vulnerability to loss, usually expressed in dollars or in monetary units.
Occurrence: An event that results in an insurance holder's loss.
Reinsurance: It is the insurance taken by a firm from other third party to protect the latter from huge losses.
Example: All the people residing in a particular place have taken insurance policies from an insurance company, and a massive earthquake occurred. Then all the people need the insurance benefits at a time. In such cases it is a heavy risk for that firm to offer benefits to all people. To cover the risk to the company from this type of incidents, an insurance company takes an insurance policy from another insurance company known as reinsurance.
Grace period: This is the period given to the insurance holder, if insurance holder does not pay the premium on time. The insurance company does not charge interest for a month from the date of premium.
Net premium: the amount of premium minus the agent commission.
Agent commission: it is the incentive paid for the insurance agent, in addition to his salary. For managing the customer policy. This amount is paid at a percentage on the insurance premium.
These are some of the common terms one need to know regarding insurance.
In other words, Insurance is an agreement between an individual and the insurance company in which the individual pays certain amount of money known as premium in exchange of which the company pays some money to the individual for the uncertain event.
Premium
- Premium is a certain amount of money to be paid to the insurance company at a regular interval of time by the insurance holder.
- Premium is a certain amount of money that is charged by the insurance company to the insurance holder to offer insurance service for the loss.
Insurable interest: An interest on a person or thing that will support the issuance of insurance policy.
Causality: Liability or loss resulting from an accident.
Insurance claim: A demand made by the insurance holder or from beneficiary, for payment of benefits as provided by the policy.
Coverage: The scope of protection provided under an insurance policy.
Death benefit: The limit of insurance or the amount of insurance that will be paid in the event of the death of a covered person.
Exposure: The measure of vulnerability to loss, usually expressed in dollars or in monetary units.
Occurrence: An event that results in an insurance holder's loss.
Reinsurance: It is the insurance taken by a firm from other third party to protect the latter from huge losses.
Example: All the people residing in a particular place have taken insurance policies from an insurance company, and a massive earthquake occurred. Then all the people need the insurance benefits at a time. In such cases it is a heavy risk for that firm to offer benefits to all people. To cover the risk to the company from this type of incidents, an insurance company takes an insurance policy from another insurance company known as reinsurance.
Grace period: This is the period given to the insurance holder, if insurance holder does not pay the premium on time. The insurance company does not charge interest for a month from the date of premium.
Net premium: the amount of premium minus the agent commission.
Agent commission: it is the incentive paid for the insurance agent, in addition to his salary. For managing the customer policy. This amount is paid at a percentage on the insurance premium.
These are some of the common terms one need to know regarding insurance.
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