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If you're considering insurance, or have received quotes from different insurance providers, you might come across some unfamiliar terms.
Understanding them will help you compare different types of insurance policies, what they cover, and what they don't.
An insurance policy is a contract of insurance, which refers to the level of cover you've chosen, summarises its terms, and details any particular conditions you should be aware of.
A certificate of insurance or policy document is an official document that provides legal proof of your insurance coverage.
Exclusions are specific risks or events that you're not being covered for.
A premium is the total amount you pay for an insurance policy. It's usually calculated annually, but can often be paid in monthly instalments.
The sum insured is the agreed value of an insured item or risk, which will form the basis of a claim.
The policy holder is the person who is taking out the insurance policy.
The insured is the person who the insurance covers – usually also the policy holder.
A free-look period or cooling off period refers to the period during which you can cancel an insurance policy after purchase.
A grace period is the length of time after a premium is due in which a policy holder can make a premium payment without their insurance coverage lapsing.
A claim is when you or your nominee ask your insurance provider to cover some or all of your financial losses in response to an insured event – such as a theft or a car accident. If a deductible applies to your policy, this will be your contribution towards the costs of those losses.
A rider is any additional cover that you add to an existing policy, like cover for specific items of value, or adding an extra driver to a motor insurance policy.
Surrender value applies where the money is accessed or the policy is terminated before the maturity or end of the insurance policy term.
Maturity is when certain types of policy (such as life insurance or a pension) reach their agreed time limit. At this point, the policy ends, and its value is paid out.
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