Terms Commonly Used In Insurance

The following are some of the commonly used terms in insurance:
Term Description
Agent An insurance agent is an individual or entity that sells insurance policies on behalf of an insurance company. They represent the insurer, and clients cannot choose an agent to act on their behalf. The agent is compensated by the insurer through a commission for their services.
Annuity An annuity is an insurance policy that guarantees you an income for the rest of your life or for a specific period. You can deposit a lump sum with an insurance company, which will then provide a regular income for the retiree's lifetime. This regular income is referred to as a pension or annuity.
Assured This is the person on whose life a policy is taken and in the event of their death, the insurance company pays the benefits to their nominated beneficiaries.
Beneficiary This is the person(s) nominated by the policyholder in a life assurance policy to be paid by the insurance company in the event of their death.
Broker An insurance broker is a professional who represent the client to secure insurance cover from any authorized insurers. A broker's role is also advisory. A broker is paid a commission by the insurer for brokerage services.
Claim This is a demand for compensation by the insured from the insurance company for loss arising from the occurrence of an insured risk. The insured presents the claim to the insurer to be compensated for the loss suffered.
Cover-note This is a document that is given to the insured by the insurer on payment of the first premium while awaiting processing of the policy document. The cover note acts as evidence that the insurer has accepted to cover the proposed risk.
Excess Excess is the first portion of each and every claim that the insured contributes towards settlement of a loss. The policyholder either makes a cash payment or the insurer deducts from the claim pay out. Excess is based on the value of a vehicle in motor insurance, or the sum insured in property insurance.
Exclusions Exclusion in insurance refers to specific conditions or circumstances that are not covered by the insurance policy, meaning the insurer will not pay for losses related to those exclusions.
Grace period A grace period in insurance is the extra time allowed after the premium due date during which a policyholder can make a payment without losing coverage or facing penalties.
Insurance Contract This is a written contract between the insured and the insurer where the insurer undertakes to protect the insured against loss arising from the occurrence of the risk insured against.
Insured This is the individual or an organisation who buys insurance cover. The insured can either be an individual or a corporate entity.
Insurer This is the insurance company that undertakes to provide the insurance cover.
Policy conditions These are the rules governing the application and interpretation of the insurance contract.
Policy document The policy document is the written contract of insurance between the insured and the insurer. It contains terms and conditions of the insurance cover as well as the risks covered.
Policy terms These are the rules and obligations that define the coverage provided by a contract of insurance.
Premium This is the specified amount of money which is paid by the insured to the insurer in return for insurance coverage. Payment of premium can be in various methods e.g cash, cheque, mobile money, check off, bank standing order and in different frequencies for example daily, monthly, quarterly or annually.
Proposal form A proposal form is a document completed by someone who wants to get insurance coverage from an insurance company. It is an important document used by the insurer to gather information about the person seeking insurance and the item or risk they want to insure.
Proposer This is the person or entity wishing to take out an insurance cover. They are the prospective insured.
Risk These are perils or events against which an insurance cover is taken. They include fire, theft, accident, floods, earthquake, accidental damage etc.
Sum insured/sum assured The sum insured (or sum assured) is the amount of money that an insurance company agrees to pay to the policyholder or their beneficiaries in case of a claim. It represents the coverage limit or coverage amount of the insurance policy.
Surrender value This is the amount of money a policyholder will receive from an insurance company when a life policy is terminated after it has been in force for over 3 years but before maturity date of the policy.