What are the terms used in insurance?

What are the terms used in insurance?

10 Common Insurance Terms

  • Adjuster. A claims or insurance adjuster is employed by or acts on behalf of an insurance company to examine, evaluate and settle insurance claims.
  • Certificate of Insurance (COI)
  • Claim.
  • Declaration Page.
  • Deductible.
  • Liability Coverage.
  • Peril.
  • Premium.

What is the premium for insurance?

A premium is the amount of money charged by your insurance company for the plan you’ve chosen. It is usually paid on a monthly basis, but can be billed a number of ways. You must pay your premium to keep your coverage active, regardless of whether you use it or not.

Which of the following terms means the frequency of a premium payment?

The premium payment mode is the frequency that premium payments are made. More frequent premium payments means lower premiums. Judas and John are identical twins.

Which term describes a situation in which people who are the most likely to have claims are also the most likely to seek insurance?

Adverse selection – The concept of adverse selection means that the people who are most likely to have claims are also the most likely to seek insurance.

What is pooling of risk in insurance?

Risk pooling is the practice of sharing all risks among a group of insurance companies. With risk pooling arrangements, instead of participants transferring risk to someone else, each company reduces their own risk. Risk pooling is the practice of sharing all risks among a group of insurance companies.

What is adverse selection in insurance?

In the case of insurance, adverse selection is the tendency of those in dangerous jobs or high-risk lifestyles to purchase products like life insurance. To fight adverse selection, insurance companies reduce exposure to large claims by limiting coverage or raising premiums.

How insurance premium is calculated?

The premium for OD cover is calculated as a percentage of IDV as decided by the Indian Motor Tariff. Thus, formula to calculate OD premium amount is: Own Damage premium = IDV X [Premium Rate (decided by insurer)] + [Add-Ons (eg. bonus coverage)] – [Discount & benefits (no claim bonus, theft discount, etc.)]

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