As an insurance advisor, you’ll need to familiarize yourself with job-specific terminology. The moment when you decide to pursue a career in insurance may not have involved you thinking of these terms, but learning them will help give you momentum as you begin your journey, and also set you up for working in this field in the future.
Not only does this type of terminology help you better understand how insurance works, but it also helps you better understand the nature of the investment made by the insured. Here are five key terms to understand for your career as an insurance advisor.
Understand Coinsurance
Those working in insurance will recognize the term coinsurance as being the percentage of all claims paid for by the member while the other portion is paid for by the insurance company, following the application of any deductibles. This establishes the share of expenses between the company and the member. For example, an insurance plan where 80% of claims are paid for by the insurance company means that the remaining 20% is paid for by the member, as this is their coinsurance percentage.
Premium: What the Member Pays to the Insurance Company for Their Plan
A premium refers to the cost of the member’s insurance plan as a whole, in order for them to continue using it. This amount must be paid for in order to repay the insurer for assuming their portion of the risk. Greater amounts of coverage are a result of higher premiums, resulting in less money paid for by the insured. Should the insured not be able to pay the premium, their plan will be discontinued. In Canada, premiums are most often paid every month, every three months, or yearly.
Deductible: A Must-Learn Term for Students in Insurance Advisor Courses
A deductible is the amount that must be paid for by the insured member prior to the insurance company covering the remaining amount. This amount of money is paid out of pocket by the member and is deducted from the claim payment by the insurer. Students in insurance advisor courses should know that there tends to be a correlation between the ratio of deductibles and premiums in a plan, as the insured may have many deductibles but few premiums, or vice versa.
Deductibles must be paid by the insured before their plan covers the remaining amount
Exclusion: Understanding What Insurance Cannot Cover
Those attending an insurance advisor college in Alberta should also understand this term, as it pertains to what insurance companies cannot do for plan members. Exclusions refer to any conditions that are not covered under an insurance policy, and cannot be used by the member in order to get any money back from their insurer.
Policyholder: The Person Getting Covered by the Insurance Policy
The party who pays the premium and is the recipient/owner of the insurance policy is typically known as the policyholder. If you’re working toward your insurance advisor diploma, you should understand this term as representing the party who is protected by insurance coverage in the event of them suffering from circumstances that can be covered by the insurer. In some cases, policyholders can add more parties to be covered under their plan, such as members of their family.
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