The insurance policy is an agreement between you and the insurance company, which define the particular claims that the insurance company is legally obligated to cover. In return for an initial premium, commonly called the annual premium, the insurance company promises to cover certain perils occurring within a specified time period caused by covered under the insurance policy. These perils may include injuries caused at work, accidents occurring outside your home, death caused by a specified event, loss of use or enjoyment, loss of use or profit, theft, destruction of belongings, and a host of other risks. It is important to understand, what all these terms mean before you decide on what insurance policy to buy.
When an individual applies for an insurance policy, he has to furnish the insurer with a lot of information about himself, so that he is able to provide the right information needed by the insurer in order to determine whether he is qualified for a particular coverage. This includes information such as marital status, age, medical history, driving record, details about his business, and any outstanding debts. This information is used to calculate the amount of premiums that will be paid by the insured. This amount is known as the deductible. It is advisable to calculate the amount of coverage provided by the insurance policy before buying it, so that you do not have to change the same once you have made the purchase.
Travel insurance or Warehouse Insurance provides coverage for a particular event, such as a trip to a specified destination. Most people usually take out travel insurance or health insurance when they book tickets for a holiday trip, so that they do not have to worry about paying the expenses in case they get sick during the trip. This also prevents them from losing out on earning money if they are unable to travel due to illness. Travel insurance provides coverage for losses incurred by the insured during the holiday trip, such as hotel reservations, lost luggage and other related costs.
An important aspect of an insurance policy or an insurance contract is the type of coverage it provides. A comprehensive insurance policy provides coverage for all types of situations. On the other hand, a specialized policy can cover a specific situation. For example, a specialized coverage form is valid for a single trip abroad and all the coverage details of that single trip.
Different types of insurance policies have different policy limit. Generally, life insurance policies have a policy limit that determines how much the beneficiary can claim upon. Insurance contracts can also stipulate a ceiling or floor on the amount of payment that can be claimed from the insurance policy owner. Some insurance policies provide a lump sum payment to the beneficiary if the insured dies during the coverage period. On the other hand, some insurance policies allow for accelerated payments.
The terms and conditions of an insurance policy are designed to provide protection to the insured. When purchasing a policy, it is important to understand what is included in the coverage and what is not. Understanding the key aspects of the insurance policy, such as minimum benefit and maximum benefit levels, will help in deciding whether the policy meets the needs of the insured. If a consumer is not knowledgeable about the insurance policies being considered, he or she should rely on the advice of a qualified professional agent or broker who has the knowledge and experience to assist in making an informed decision.