Explanation of insurance terms

Explanation of insurance terms

Policyholder

The insured is also called the insured, generally known as the insured, refers to the person who has insured interest in the insured, applies to the insurance company for a life insurance contract, and is obliged to pay the insurance premium. The proposer has the right to appoint or change the beneficiary, change the insurance contract, and terminate the contract.

The proposer must be a person who has an insurable interest in the insured. If there is no insurable interest, the insurance contract will be void. The Insurance Law stipulates that the applicant has insurable interests in the following types of people, that is to say, the applicant can take these people as the insured and apply for life insurance from the insurance company: 1. himself or his family members; 2. living expenses or education expenses 3. The debtor; 4. The person who manages property or interests for himself.

The Insured

The insured of life insurance is the person whose life and body are the subject of insurance, and whose survival, death, disease, or injury is the insurance claim element, that is, the object of insurance. The proposer may not only enter into an insurance contract for the insured himself but also others may enter into an insurance contract for the insured. If the husband is the wife, the parents are the children, the creditor buys a life insurance policy for the debtor. However, when the proposer takes another person as the insured, he must have an insurable interest in that person; and when entering into an insurance contract, the insured must also agree in writing and agree on the amount of insurance.

Beneficiary

A person who has received insurance benefits paid by an insurance company by an insurance contract. In general life insurance contracts, there is an agreement to designate or change the beneficiary, and the designation or change of the beneficiary belongs to the rights and interests of the proposer. If the proposer of the death insurance contract does not designate the beneficiary, the insurance money is the estate of the insured. There is no limit on the number of designated beneficiaries. The proposer can designate one or several people as the beneficiary. The beneficiaries are not limited to natural persons (individuals), and legal persons (organizations, bank numbers or groups, etc.) can also be designated as the beneficiaries. . The only restriction on naming a beneficiary is that the beneficiary must be alive at the time the insurance amount is claimed.

Assurer

The insurer refers to various organizations that operate the insurance business. When the insurance contract is established, it has the right to collect insurance premiums from the proposer and must pay the insurance money when the insured has an insured accident. Generally refers to insurance companies.

Insurance Interest

Insurable interest, also known as “insurable interest”, refers to the legitimate economic interest that the proposer can enjoy in the life or body of the insured due to its interest. With this kind of economic interest, the proposer will suffer losses due to bodily injury or death of the insured and will continue to hold if there is no insured accident.

Application Form

The application form is a written document that the applicant fills in when applying to the insurance company for insurance. It mainly includes three parts: basic information, notification matters, and declaration matters. Basic information mainly refers to the basic information about the applicant, the insured, and the beneficiary, as well as the matters to be insured, such as date of birth, address, telephone number, ID number, occupation; the information to be notified, is to record the information to the insured. Questions, such as current health status, whether you are pregnant now, etc.; declaration matters refer to the authorized matters of the insured and confirm the truth of the notified matters.

Insurance Premium

The insurance company calculates the amount that the applicant should pay to the insurance company in each period according to the insurance amount, insurance rate, and payment method of the applicant.

Sum Insured

The insured amount is the amount of insurance that the insurance company agrees to underwrite, and it is also the amount that the insurance company will pay by the insurance contract when an insured accident occurs.

Insurance Age

Refers to the age at which the insured is insured at the time of being insured. It is calculated on the day of the insurance application and is calculated based on full years of age, but if it exceeds six months, it will be counted as one year old. For example person A was born in January 1965, a person B was born in August 1965, and both of them were insured in September 1999, then the age of A is 34 years and 8 months, and the insurance age is 35 is 34 years old and 1 month old, and the insurance age is 34 years old.

Base Plan and Rider

When the insured applies for insurance, the insurance products that the insurance company can issue separately are called the main contract. Except for special agreements, generally speaking, the insurance effect of the supplementary contract shall cease when the insurance effect of the main contract ceases.

Automatic Premium Loan Option

The premium payment period of an insurance contract may be as long as 20 years, and within the premium payment period, the policyholder may not be able to renew the premium due to busyness or recession. Given this, to prevent the policyholder from suspending the policy due to temporary negligence or scheduling difficulties, the insurance company will ask the policyholder to choose whether to accept the service of “automatic premium payment” provided by the insurance company when the policyholder fills in the insurance request form. The advantage of policy advance payment is that in the unfortunate event that an insurance accident occurs during the automatic advance payment period, the insurance company still bears the insurance responsibility, but the premium and interest that have been advanced will be deducted first when the insurance premium is paid.

Grace Period

If the installment premium is not paid after the second installment, the annual or semi-annual payment, by the terms of the contract, must be sent by the insurance company to send a notice of premium payment, within 30 days from the next day after the reminder arrives as a grace period For those who pay monthly or quarterly, no reminder will be given, and 30 days will be the grace period from the day following the day on which the premiums are due as stated in the insurance policy. During the grace period, the insurance contract will continue to be valid, and the insurance company will still be responsible for the insurance in the event of an insured accident, but the unpaid insurance premium will be deducted from the insurance payment; if the renewal premium is not paid within the grace period, the insurance company will The contract shall cease to be effective from the day following the expiry of the grace period, and the insurance company shall no longer be liable for the insurance.

Waiting Period

Generally speaking, the duration of time after which an insured person is eligible for coverage or benefits under insurance or retirement plans, or benefits under health insurance policies and disability provisions.

Cash Surrender Value

Termination fee, also known as termination refund, surrender value, or cash value, is calculated by the insurance company based on the policy value reserve at that time when the insured terminates the life insurance contract or the annuity insurance contract before the annuity payment period begins. The amount paid to the insured. However, the insurance company usually deducts a cancellation fee. In addition, the principal and interest of the policy loan and the principal and interest of the advanced premiums that have not been paid in full will also be deducted before the payment.

Exclusion

An exclusion is a clause in an insurance policy that states that in certain circumstances the insurance company is exempt from liability for payment. For example, the insured commits suicide, the insured intentionally causes the insured to die, etc.

Concealment

When concluding an insurance contract with an insurance company, the proposer shall, based on the principle of good faith, have the obligation to inform the insurance company in writing about the matters in question. The insurer has the right to rescind the contract if the insurer is intentionally concealed, negligently omissions, or falsely stated so that the insurance company cannot estimate the risk reasonably. Even after an insured event occurs, the insurer has the right to cancel without paying insurance premiums.

The right of rescission exercised by the insurance company against the proposer or the insured violating the “duty of disclosure” shall be extinguished after one month after the insurance company becomes aware of the reason for the rescission or after two years from the contract start date.

Extended Term Insurance

Under the principle of not changing the insurance amount of the year in which the extension is processed, the balance after deducting the operating expenses, policy loan principal and interest, arrears, and advance payment of the principal and interest of the insurance premium shall be calculated from the policy value reserve accumulated in the contract at that time, so as not to exceed the original insurance The period shall prevail, so that the contract can continue to be valid until a certain date.

After changing to extended term insurance, the policyholder does not need to pay the insurance premium. If the insured dies or becomes disabled before the specified time, the insurance company shall still pay the death or total disability insurance according to the agreed insurance amount. If the insured is still alive on the specified date and has paid the survival insurance money, the company will pay the entire survival insurance money at one time.

Reduced Paid-Up Insurance

Under the principle of not changing the original insurance period and conditions but reducing the insurance amount, the balance of the policy value reserve accumulated in the contract at that time after deducting the operating expenses and the principal and interest of the policy loan, arrears of premiums, and advance payment of the principal and interest of the premium shall prevail. Using it as a one-time single-payment insurance premium, the policyholder does not need to pay the insurance premium again, and the contract will continue to be valid until it expires. After changing to paid-up insurance, if the insured dies or becomes disabled during the insurance period, the death benefit or total disability benefit will be paid according to the paid-up amount.

Fixed Payment [Daily Payment] (Hospital Incom, HI)

If you are hospitalized due to an accident or disease, you can submit a medical certificate to the insurance company to apply for payment.

Pay-as-you-go (Hospital & Surgical, HS)

That is, the medical expenses incurred by hospitalization due to illness or accident shall be reimbursed by actual reimbursement. However, to avoid unnecessary waste, insurance companies usually set limits. In addition, the application for the actual payment of the actual payment must be submitted in the original receipt.

Assumed Interest Rate

When the insurance company collects the premium from the policyholder, it can use the premium to make the most favorable investment, and the income obtained will pay the interest to the policyholder. is the predetermined interest rate. The same insurance type, the higher the predetermined interest rate, the lower the premium.

Policy Cancellation Right

Within ten days from the day following the delivery of the policy, the proposer may apply to the insurance company for cancellation of all insured insurance contracts in person or by registered mail if he is not satisfied with the policy selection. The validity of the contract revocation will take effect from the day after the proposer’s written intention reaches zero o’clock on the next day, the insurance contract will be invalid from the beginning, and the insurance company shall refund the insurance premium paid by the proposer without interest.

The insurance company shall not be liable for any insured event that occurs after the cancellation of the contract takes effect. However, before the revocation of the contract takes effect, if an insured accident occurs, it shall be deemed that it has not been revoked, and the insurance company shall still be responsible for the insurance.

Responsibility Reserve (Reserve)

Liability reserve is the amount of money that a life insurance company collects insurance premiums from policyholders to be able to fully perform the responsibility of paying insurance premiums in the future by the insurance contract. The deposit standard of the liability reserve shall be formulated by the Financial Supervisory Commission.

Policy Value Reserve

The policy value reserve can be regarded as the number of accumulated premiums paid by the policyholders after deducting necessary expenses, which can be used by the insurance company to pay for future insurance benefits, which is equivalent to the excess premiums paid by the policyholders to the insurance company when they were young. Policy value reserves are based on mortality rates and predetermined interest rates based on set insurance rates.

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By Michael Caine

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