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Insurance Terminology Explained (Not for Dummies, Just Not For Nerds)

Insurance is an essential tool for protecting yourself financially against various risks. However, navigating the complex world of insurance can be daunting, especially with all the industry-specific terminology. In this article, we'll explain some common insurance terminology to help you understand your policy better.

  1. Premium - The amount you pay for your insurance coverage.

  2. Deductible - The amount you pay out of pocket before your insurance coverage kicks in.

  3. Coverage limit - The maximum amount your insurance company will pay for covered losses.

  4. Policy - The contract between you and your insurance company, outlining the terms of your coverage.

  5. Policyholder - The person or entity that purchases the insurance policy.

  6. Insurer - The insurance company that provides coverage.

  7. Claim - A request for reimbursement for a covered loss.

  8. Exclusions - Specific circumstances or events that are not covered under your policy.

  9. Endorsement - A modification to your policy that adds or removes coverage.

  10. Rider - A separate policy add-on that provides additional coverage.

  11. Liability - Legal responsibility for damages or injuries caused to another party.

  12. Underwriting - The process of evaluating the risk and determining the premium for a policy.

  13. Actuary - A professional who uses statistical data to assess risks and set premiums.

  14. Co-pay - The fixed amount you pay for a covered service.

  15. Co-insurance - The percentage of costs you are responsible for paying for a covered service.

  16. Pre-existing condition - A health condition that existed before you applied for insurance coverage.

  17. Grace period - A period of time after the premium due date during which you can still make a payment without losing coverage.

  18. Cash value - The amount of money you can receive if you cancel your policy or surrender it.

  19. Renewal - The process of extending your policy for another term.

  20. Lapse - The termination of your policy due to non-payment of premiums.

Understanding insurance terminology is essential for making informed decisions about your coverage. By familiarizing yourself with these terms, you can better navigate the insurance industry and make sure that you have the coverage you need to protect yourself financially against unexpected events.

(c) Form America LLC, 2023. All rights reserved. You can republish this, but please credit on reprinting.

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