KNOW YOUR INSURANCE: PART 2 OF 3.

Ok with all the types of personal insurance? Now, let’s deal with the jargons. Jargons are the hardest to grasp – they sound weird, sometimes they don’t even have a relevance in your life!

i am confused...you were saying?

Let us run you through the most basic of the insurance lingo, so that when you face an advisor, you know what is he truly talking about!

Beneficiary

The person you identify to receive the sum assured from your policy if you pass on.

Cash Value (also known as cash surrender value or surrender amount)

The amount of money you will receive if your insurance policy, which has a savings feature, is surrendered.

You may only receive a cash value if you surrender your policy after it has been in force for a pre-determined number of years (dependent on your policy). Whatever coverage that was mentioned in the policy ceases as soon as the policy is cancelled or surrendered.

Non-Participating

A life insurance policy that doesn’t offer a share of the profits of the insurer.

You don’t receive bonuses or dividends from the insurer.

Participating

A life insurance policy that offers a share of the profits of the insurer.

Bonuses and dividends are declared once a year by the insurer. They are not guaranteed until they are declared.

Policy Dividend

A payment made to policyholders of participating plans, based on an insurer’s earnings and surplus.

Policy Term

The time during which a policy is in force.

Premium

The amount of money you pay for insurance cover.

Premiums are paid at regular intervals, usually once a month, once every three months, once every six months or once a year.

Sum Assured (also known as amount of cover)

For life insurance, this is the amount of money your beneficiary will receive if you pass away. For health insurance, this is the amount of money you’ll receive if you fall ill or are injured (depending on your policy).

A health insurance policy usually has an amount of cover for each benefit. For instance, a hospital expenses reimbursement benefit can give you a $10,000 amount of cover while a daily hospitalisation income benefit can give you a $300 cash allowance for each day that you are hospitalised.

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