Insurance is a means to protect one from financial loss. However, as simple as the definition is, insurance policy documents are littered with incomprehensible terms that often leave people confused and intimidated. If you are a policyholder or may buy a policy in the near future, it is necessary for you to know very important ten insurance terms.
The face amount is the amount assured on the face of the insurance policy. This amount is paid when the policy matures or in the event of the unforeseen demise of the policyholder. Additional amounts payable under an accidental demise or any other special provisions are not included in the face amount.
Floaters are insurance plans that are designed to cover your assets and can be moved from one place to another. It offers a cover against both, risks affecting the property at a fixed location and transportation perils.
Fire and Special Perils Policy:
Fire and Special Perils Policy is a contract of insurance that protects the policyholder’s assets against the consequences of the accidental explosion, fire, impulsion, lightening, aerial devices perils, man-made dangers such as strike, riots etc. A Fire and Special Perils plan is a contract where the insurance company assures the policyholder of reimbursement for damages and loss caused to the assets for a certain period of time. Usually, the fire policy is a one-year plan and it requires renewal annually.
First Class Life:
First Class Life is a category that denotes a low risk among the categories of life insurance risk. First Class Life is charged a subsidized premium charge due to its low-risk category. If you are identified as a first-class life, then you’re subject to a reduced premium rate for an insurer.
Free Look Period:
A free look period gives you the option to re-examine the policy’s term and conditions for 15 days from the date the policyholder receives the document of the policy. If you’re not satisfied with the terms and conditions of the policy or if you disagree with them, then you have the option to return it, mentioning the reasons for your objection.
First Unpaid Premium:
First Unpaid Premium is the first time the policyholder defaults on the payments of the premiums. With every premium payment made, you will receive a receipt indicating the upcoming due date of the premium payment. If you skip the payment, this date is recorded as the date of the first unpaid premium.
Funds for Future Appropriation:
Funds from the insured’s accounts, which are not allotted due to delays in the approval etc., are referred to as Funds for Future Appropriation. The undistributed proceeds in the form of profits are similarly set aside for certain purposes. These undistributed proceeds from the accounts of the insured that are yet to be disbursed are known as funds for future appropriation.
Facultative reinsurance is a kind of reinsurance wherein the reinsurer can either accept or reject any peril or risk presented by an insurance provider looking for reinsurance.
A fiduciary is an individual holding something in trust for another.
A family insurance is a life insurance plan, which provides insurance to all or various members of one’s family within a single contract, usually a whole life insurance for the breadwinner and a small sum of term insurance for children (including the kids born after the issue of the policy) and spouse.
Over to you!
We know that insurance jargon can be confusing for a layman; we have tried to simplify a few insurance terms for you.
If you plan to buy an insurance policy, then you must be aware of the common insurance terms used by your agent, aggregator or your insurer. This know-how of insurance jargon would help you understand your policy documents better and hence may result with you buying a good and profitable policy for yourself.